Custom Home Market Share Modestly Declines

Data from the US Census Bureau’s Survey of Construction (SOC), with additional analysis provided by the National Association of Home Builders (NAHB), reveals that custom homes accounted for 17.6% of new single-family homes started in 2022. This share is down slightly from 17.8% recorded in 2021 and is the lowest annual custom home share that has been reported since 2005, when the SOC was re-designed.

The custom home market consists of contractor-built and owner-built houses—homes built one at a time for owner occupancy on the owner’s land, with either the owner or a builder acting as the general contractor. The alternatives are homes built for sale—on the builder’s land, often in a subdivision, with the intention of selling the house and land in a single transaction—or homes built for rent. In 2021, 77.0% of the single-family homes started were built for sale, and only 5.4% were built for rent.

NAHB analysis of the annual SOC data reveals the following for the 9 census divisions:

• The highest custom home share in 2021 was 40.1% in the New England Division.
• In the South Atlantic Division, the share was only 11.5%.
• In the East South-Central Division, 38.8% of new homes started were contractor-built or owner-built houses, followed by the East North-Central Division at 32.8% and 31.5% in the Middle Atlantic Division.
• In the West North-Central Division 20.% of new homes started where custom homes, followed by 15.0% in the West South-Central Division, 14.7% in the Pacific Division, and 12.9% in the Mountain Division.