Hardware Retailing The Industry's Source for Insights and Information
Custom homebuilding increased in 2025, despite a more than 6% decline for overall single-family housing starts, according to the National Association of Home Builders (NAHB). The custom building market is less sensitive to the interest rate cycle than other forms of homebuilding but is more sensitive to changes in household wealth and stock prices. With spec homebuilding down and the stock market up, custom building expanded its market share.
There were 45,000 total custom building starts during the fourth quarter of 2025, according to NAHB’s analysis of Census data from the Quarterly Starts and Completions by Purpose and Design survey. This number is down 4% relative to the fourth quarter of 2024.
For 2025 as a whole, custom single-family housing starts totaled 186,000 homes, up 3% from 2024. The current market share of custom homebuilding, based on a one-year moving average, is almost 20% of total single-family starts. This is down from a prior peak of 31.5% set during the second quarter of 2009 and the 21% peak at the beginning of 2023.
Even though single-family housing starts are down, builder confidence in the market for newly built single-family homes has already seen increases in 2026, despite the continued affordability concerns expressed by many builders, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI). Sentiment rose one point to 38 in March, following an upward revision in February.
“Affordability for buyers and builders remains a top concern,” says NAHB Chairman Bill Owens, a homebuilder and remodeler from Worthington, Ohio. “Many buyers remain on the fence waiting for lower interest rates and due to economic uncertainty. Builders are facing elevated land, labor and construction costs and nearly two-thirds continue to offer sales incentives in a bid to firm up the market.”
The survey revealed 37% of builders cut prices in March, up from 36% in February. The average price reduction remains stable at 6%. The use of sales incentives was 64%, down 1% from February.
