US Custom Home Building Steady in Q1

According to a National Association of Home Builders (NAHB) analysis of the latest US Census Bureau Quarterly Starts and Completions by Purpose and Design survey, custom home builder growth was flat year-over-year in Q1. Unlike other types of home building, the custom market is less affected by interest rate changes but more sensitive to shifts in household wealth and stock prices.

There were 34,000 custom building starts in Q1, unchanged from 2024Q1. Over the past four quarters, custom housing starts totaled 181,000, a modest increase of just over 2% compared to the previous four-quarter period of 177,000.

Currently, custom home building accounts for about 18% of total single-family starts based on a one-year moving average. This is down from the previous cycle peak of 31.5% in 2009Q2 and the more recent peak of 21% at the start of 2023.

NAHB notes that this analysis uses a narrow definition of custom home building, excluding homes built for sale. It refers specifically to homes constructed under contract where the builder does not hold the tax basis in the structure during construction.