The nation’s housing market does not perform in a uniform manner. Sectors respond differently to external market forces.

According to an August 2025 report from the National Association of Home Builders (NAHB), activity in the custom home building sector is outshining other types of home building in a market that faces multiple challenges. 

NAHB analyzed census data and found that the custom home sector grew by 4% in the second quarter of this year. There were 54,000 starts of custom-built homes in that timeframe.

This represents a continuing trend for the past year. According to the NAHB analysis, the 184,000 custom home building starts over the last 12 months also represents an increase, although a slightly smaller one at 2%.

The trend is significant because custom homes represent a significant portion of the total number of single-family housing starts, at 19%. The sector was at its highest share in 2009, when it reached 31.5% after the housing market crashed.

Several factors contribute to this trend. Overall, the housing market is sluggish due to relatively high interest rates and home prices. On the other hand, custom home building does not respond in the same way to these variables as do traditional “spec” home building. Spec home building refers to the general practice of building new homes without specific buyers in mind, which is how most new homes are built.

Unlike spec homes, custom home building responds more to household income and stock market prices, which drive consumers to place orders for custom homes. With the stock market doing well, custom home building starts have gained market share.

The same census data broken down by region shows custom home building activity highest in the South, with 24,000 starts in the second quarter of 2025.