Custom Home Building Posts Steady Gains in Q3 2022

Despite weakened demand from prospective buyers and a drop in builder confidence, custom building posted strong gains throughout the third quarter of 2022. A total of 59,000 custom building starts were reported during Q3, a 5% increase compared to the third quarter of 2021, according to NAHB Eye on Housing.

Improved supply chains and deceleration in material price gains have led to a 9% gain over the last four quarters from the prior four-quarter total with an increase of 207,000 units.

After market share declines due to a rise in spec building, the market share for custom homes has increased post-covid. As measured on a one-year moving average, the market share of custom home building, in terms of total single-family starts, increased to 19%. This is down from a cycle high of 31.5% set during the second quarter of 2009. However, it is worth noting that this submarket tends to gain market share during periods of housing market weakness as it is relatively more stable with respect to demand and less interest-rate sensitive.

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