Custom Home Building Increases

Real Estate Agent with Hart Real Estate Solutions RRE-BRO-LIC-24638

Custom Home building starts increased this year compared to 2013 and 2014 custom home start figures. Custom home starts are defined as homes built on an owner’s land, with either the owner or the builder acting as general contractor. The owner and builder have an agreement before the construction of a custom home.

Compared to other single family home starts, where the builder still needs to find a buyer for their home after completion, a custom home start can provide a builder with insurance that the home will sell while also providing a homebuyer the opportunity to customize each piece of the construction process to their liking.

From Quarter 2 of 2014 to Quarter 2 of 2015, 158,000 custom homes were started. From 2013 to 2014 of the same period, 146,000 custom homes were started. Having increased custom home starts implies that there are more homebuyers with more money in the housing market, looking for more than what the standard single-family spec home can provide. Many luxury buyers, instead of struggling through a long home search in the hopes of finding the perfect fit, move to custom building to get the amenities, style, floor plan and location they want in a home.

Interestingly, though custom home building has increased in the United States, its market share has dropped significantly since 2009. In 2009, 31.5% of all single family starts were custom homes. Now, only 23.1% are custom homes.

When looking at the time period, the decline makes sense. Builders at that time were highly competitive in a down market. Many builders would have been much more willing to build any type of home as they searched for enough work to keep their business afloat. Credit issues also made it hard for builders at that time to build homes without set buyers. Custom home building alleviated both, providing guaranteed work at a guaranteed price. 

On top of this, the market share has also declined because the single-family construction industry rebounded in general. Through much of the recession, single-family construction totals were much smaller, allowing custom homes (even if not growing themselves) to take a larger portion of the markets.

Growing custom home starts is just another small piece of evidence suggesting the United States housing market is rebounding and improving.






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