US Custom Home Building Declines in Q3

Recently released US Census Bureau data from its Quarterly Starts and Completion by Purpose and Design survey, with additional analysis provided by the National Association of Home Builders (NAHB), reveal a slowing market for custom home building after recent gains in market share.

There were 50,000 total custom building starts in Q3. When compared to 2022Q3, this is an almost 17% decline, which the NAHB says is consistent with weakness experienced throughout the home building sector. Over the last four quarters, custom housing starts totaled 179,000 homes—a 14% decline compared to the previous four-quarter total of 208,000.

The NAHB points out that after share declines due to a rise in spec building in the wake of the pandemic, the market share for custom homes increased until recently. As measured on a one-year moving average, the share of custom home building, in terms of total single-family starts, has fallen back to 20%. This is down from a prior cycle peak of 31.5% set during 2009Q2.