A new report from the The National Association of Home Builders [1]states that custom home building has been flat over recent quarters, with just 29,000 custom starts in Q1 2019.
The data, which was provided by the U.S. Census Bureau [2], shows this was down slightly compared to 31,000 custom starts in Q1 2018. There have been 170,000 custom housing starts over the last four quarters, which is a 1.2% decline compared to the prior four quarters.
Custom building for single-family housing totaled 19%, down from the high of 31.5% during Q2 2009.
The market share for custom built single-family homes hasn’t been this low since 2005-2006, when it dropped below 18%.
The housing crisis and recession more than a decade ago interrupted a 15-trend away from homes built on the eventual owner’s land. The NAHB reports that housing production slowed in 2006 and 2007, and the market share for the not-for-sale new housing increased as the number of single-family starts declined.
“Recent declines in market share are due to an acceleration in overall single-family construction, especially in spec home building. As this part of the market cools due to declining affordability, the market share for custom homes will continue to level off,” the report states.
A report from the Department of Housing and Urban Development [3] and the Census stated that residential real estate permits increased month-over-month, but fell slightly in April when compared to 2018.
Privately owned housing units authorized by building permits in April were at a seasonally adjusted annual rate of 1,296,000, 0.6% above the revised March rate of 1.2 million, but is 5% below the April 2018 rate of 1,3 million. Additionally, single‐family authorizations in April were at a rate of 782,000, 4.2% below the revised March figure of 816,000.
While custom home building has been flat, housing starts overall rose month-over-month, but like April, saw an annual decline, sitting at a seasonally adjusted annual rate of 1.2 million in April. This is 5.7% above the revised March estimate of 1.1 million, but is 2.5% below the April 2018 rate of approximately 1.26 million.