Solid Gain for Custom Home Building in 2021

NAHB’s analysis of Census Data from the Quarterly Starts and Completions by Purpose and Design survey indicates custom home building expanded by 10.8% in 2021 amid strong demand for move-up purchases given a rise in existing home equity.

There were 49,000 total custom building starts during the final quarter of 2021. This marks a 11.4% gain from the fourth quarter of 2020. Over the last four quarters, custom housing starts totaled 195,000 units, a 10.8% gain from 2020 (176,000).

The acceleration of custom home building has increased its market share after a period of decline. As measured on a one-year moving average, the market share of custom home building, in terms of total single-family starts, increased to 17.3%. This is down from a recent high of 31.5% set during the second quarter of 2009.

Note 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. Custom homes are homes built on an owner’s lot with the builder providing a service of construction rather than a sale of real estate. The majority of custom construction is undertaken by private, community home builders. —BY ROBERT DIETZ 

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