Custom Home Building Continued to Expand in 2021

A closer look at the U.S. Census Bureau’s Quarterly Starts and Completions by Purpose and Design data, with further analysis provided by the National Association of Home Builders (NAHB), reveal the custom home building expanded in 2021 by 10.8%. The result of strong demand for move-up purchases given a rise in existing home equity.

In Q4 of 2021, 49,000 total custom home building starts were reported. This is an 11.4% year-over-year improvement. Over the past four quarters, custom housing starts totaled 195,000 units, a 10.% gain from 2020, when 176,000 units were reported.

The report notes that the acceleration of custom home building has increased its market share after a period of decline. As measured on a one-year moving average, the market share of custom home building, in terms of total single-family starts, increased to 17.3%. This is down from a recent high of 31.5% set during the second quarter of 2009.

The NAHB clarifies, that for the purpose of this report the definition of custom home building does not include homes intended for sale, so the analysis in this post uses a narrow definition of the sector. Custom homes are homes built on an owner’s lot with the builder providing a service of construction rather than a sale of real estate. The majority of custom construction is undertaken by private, community home builders.