US Custom Home Building Sector Improves in Q4

According to the US Census Bureau’s latest Quarterly Starts and Completions by Purpose and Design report, with analysis provided by the National Association of Home Builders (NAHB), there were modest gains for custom-home builders in Q4, following a period of slight softening of market share. The custom-building market is less sensitive to the interest rate cycle than other forms of home building, NAHB said.

There were 47,000 total custom building starts during Q4, a 7% increase year-over-year. In 2024 overall, custom housing starts totaled 181,000 homes—just below a 2% increase compared to 178,000 in 2023.

NAHB reports that the current market share of custom-home building, based on a one-year moving average, is approximately 18% of total single-family starts. This is down from a prior cycle peak of 31.5% set during 2009Q2 and the 21% local peak rate at the beginning of 2023, after which spec home building gained market share.

In addition, NAHB notes that this 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. It represents home construction undertaken on a contract basis for which the builder does not hold tax basis in the structure during construction.