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An analysis of Census Data from the Quarterly Starts and Completions by Purpose and Design survey indicates custom home building gained market share during the second quarter, townhome construction remained flat, and single-family build-to-rent construction cooled in the quarter.

According to the analysis by the NAHB, 49,000 custom builds were started in the second quarter, an 8% decrease on a year-over-year basis. However, on a one-year moving average, the market share of custom home building increased to 21%, continuing a trend of increases beginning in 2021.

Single-family attached starts totaled 38,000 in the second quarter, flat on a year-over-year basis. Over the past four quarters, townhome construction starts totaled 141,000 homes, 5% lower than the prior four-quarter period. The market share of townhomes was 16.1% of all single-family starts, the highest market share since 1985, according to the NAHB.

Single-family built-to-rent starts totaled 20,000 during the second quarter of 2023, 4% lower than the second quarter of 2022. The four-quarter moving average of market share for the sector is 7.7%, according to the NAHB.

The long-run prospects for townhouse construction remain positive given growing numbers of homebuyers looking for medium-density residential neighborhoods, such as urban villages that offer walkable environments and other amenities.

With the onset of the Great Recession and declines for the homeownership rate, the share of built-for-rent homes increased in the years after the recession. While the market share of SFBFR homes is small, it has clearly expanded. Given affordability challenges in the for-sale market, the SFBFR market will likely retain an elevated market share as the sector cools.

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