US Custom Home Building Continues to Slow

According to the latest US Census Bureau data from the Quarterly Starts and Completion by Purpose and Design survey, with additional analysis provided by the National Association of Home Builders (NAHB), custom home building gained market share during recent quarters but experienced a drop for construction starts.

According to the survey, in 2023Q2, there were a total of 49,000 total custom building starts. This is approximately an 8% decline when compared to 2022Q2, which is consistent with weakness experienced throughout the home building sector. Over the last four quarters, custom housing starts totaled 189,000 homes, a solid number the NAHB says, but 7% lower when compared to 204,000 in the previous four quarters.

The NAHB notes that its definition of custom home building does not include homes intended for sale, so the analysis above uses a narrow definition of the custom home building sector. It represents home construction undertaken on a contract basis for which the builder does not hold a tax basis in the structure during construction.