Custom home building has been a relative bright point for the residential construction industry, as overall single-family construction has decreased by nearly 7% in the first seven months of 2026.
The custom building market is less susceptible to fluctuations in interest rates than other types of home construction; however, it is more susceptible to fluctuations in household wealth and stock prices.
In recent years, custom building has increased its market share as a result of the stock market’s rise and the decline in spec home construction.
Nevertheless, the expansion experienced a temporary halt in the second quarter.
The second quarter of 2026 saw a total of 49,000 custom building starts, as per NAHB’s analysis of Census data from the Quarterly Starts and Completions by Purpose and Design survey.
This was 9% lower than the second quarter of 2025, which had previously achieved a three-year high for quarterly construction volume.
Custom single-family housing starts have remained consistent at 183,000 homes over the past four quarters, a figure that is nearly identical to that of the previous four quarters (184,000).
The market share of custom home building is currently 20% of the total single-family starts, as determined by a one-year moving average.
This is a decrease from the 21% recent peak rate at the beginning of 2023 and the 31.5% prior cycle peak set during the second quarter of 2009.
It is important to note that the definition of custom home building in this post does not encompass homes that are intended for sale.
Consequently, the analysis in this post employs a restricted definition of the sector.
It denotes the undertaking of home construction on a contract basis, during which the constructor does not possess a tax basis in the structure.
Almost exclusively, smaller, private home contractors engage in this type of construction.
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