Custom Home Building Nearly Hits Two-Year High

Custom home building is recovering. The custom home building market hit a two-year high, showing a rebound from market slowdowns in recent quarters. According to an analysis of Census Bureau data by the National Association of Home Builders (NAHB), Q2 2024 was the best quarter for custom home building in almost two years.

The latest figures show a nearly 6% year-over-year increase in custom home building starts during Q2 2024, according to the Census Bureau’s Quarterly Starts and Completions by Purpose and Design.

This accounts for approximately 52,000 custom home starts in Q2 2024. This does not include spec builds, solely homes built off contracts.

Regardless of this recent boost, the broader four-quarter total for custom home starts stands at 180,000, marking a 5% decrease compared with the previous four-quarter total of 189,000.

CHART COURTESY NAHB

This drop can be primarily attributed to weak performance in earlier quarters, according to NAHB.

In general, the market has faced some challenges in previous quarters, particularly after a surge in speculative home building following the COVID-19 pandemic. On a one-year moving average, custom home building now accounts for just under 18% of total single-family starts, down from a peak of 21% at the start of 2023.

Despite these shifts, the recent increase in starts could signal better times ahead for custom home builders.

According to NAHB, because custom home buyers are generally less sensitive to interest rate changes than other housing market segments, there could be more stability in the market over the next several quarters.