Custom Home Market Declines

Sept. 11, 2017

The market share of custom homes is on the decline, according to National Association of Home Builders (NAHB) analysis of Census Bureau data. Only one of the 10 geographic divisions in the U.S. saw an increase in the custom home market share last year.

The East South Central division, encompassing Mississippi and Alabama, among other states, had the largest drop in the custom home share of new single-family starts, said NAHB. The division dipped from 35% to 27%. The Mountain division, including the Rocky Mountains states, was stable but was still the lowest at 14%. New England and the East North Central division near the Great Lakes had the highest custom home market share at 39%.

“Nationally, the custom home market share declined to 21%—well below the 2008–2011 levels when the credit crunch has limited builders’ access to Acquisition, Development, and Construction (AD&C) loans and shifted production towards home building on owner’s land,” said the release from NAHB.

While about a fifth of home starts in 2016 were custom homes, it varied from region to region. Single-family homes built for rent also saw an increase in East South Central and New England, increasing to 13% and 10%, respectively. The West North Central division was also at 10% in the built-for-rent market, which is twice the national average.

– Michael Miller, editorial associate

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