Custom Home Building Share Declines

September 17, 2021

By: The Working Forest Staff

NAHB EYE ON HOUSING — According to data from the Census Bureau’s Survey of Construction (SOC), the custom home share decreased to 17.8 percent of all single-family homes started in 2020—the lowest the annual custom home share has been since the 2005 re-design of the SOC.  The custom home market consists of contractor-built and owner-built houses—homes built one at a time for owner occupancy on the owner’s land, with either the owner or a builder acting as a general contractor. The alternatives are homes built for sale (on the builder’s land, often in subdivisions, with the intention of selling the house and land in one transaction) and homes built for rent.

In 2020, 77.1 percent of homes started were built for sale, and 5.2 percent were built for rent. The quarterly published statistics show that the declining share of custom homes continued into the first part of 2021 (even while the absolute number of custom homes started per quarter increased). Although the quarterly statistics are more timely, they lack the geographic detail available in the annual data set.

When analyzed by the 9 census divisions, the annual data show that the highest custom home share in 2020 was 44.4 percent in the Middle Atlantic Division. In the South Atlantic Division, on the other hand, the share was only 10.8 percent. In the East South-Central Division, 36.8 percent of new homes started were contractor-built or owner-built houses, followed by New England Division at 36.7 percent, and the East North-Central Division at 35.3 percent. In the West North Central Division, 22.7 percent of new homes started were custom homes. Less than 15 percent of the custom-built homes were started in West South-Central Division (14.4 percent), Pacific Division (14.3 percent), and Mountain Division (12.5 percent).

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