At a Glance:

 

• The number of custom building starts in Q2 2025 was 54,000, representing a 4% increase compared to Q2 2024.¹
• Custom homes currently account for about 19% of all single-family homes being built.²
• The custom home market share remains below previous highs.
• Despite growth, buyers still face land shortages, labor gaps, and financing complexity.

The custom home building sector—homes designed and built to client specifications—is experiencing modest growth in 2025. In Q2 2025, the number of custom building starts reached 54,000, indicating a 4% rise from Q2 2024.³ And in the past four quarters, custom housing starts reached 184,000 homes, representing an increase of 2% compared to the previous four quarters' total of 180,000.⁴

Custom home building data refers to construction performed under contract for clients. Importantly, it does not include properties that are constructed with the intent to sell on the market.

Factors Contributing to Market Growth

The custom home market is influenced by several factors driving growth, with customization being the most significant. A custom home allows for complete personalization, enabling homeowners to select every aspect, from the floor plan and features to the finishing touches. In addition to customization, other key factors align with the desires of modern homeowners.
 

• Changing lifestyles - Homebuyers increasingly seek spaces that reflect their tastes, lifestyles, and functional requirements, from open-concept designs to energy-efficient features.
• Smart technologies - Custom homes now incorporate advanced automation systems for security, lighting, and energy management, appealing to tech-savvy buyers interested in enhanced convenience and connectivity.
• Increased focus on sustainability - Many buyers want to invest in homes built with sustainable materials and energy-efficient systems. Many custom builders are responding to this demand by offering eco-friendly options that align with a homeowner's values.
• Financial feasibility - With mortgage rates holding steady in the mid- to upper-6% range5,  financially prepared buyers continue to pursue custom builds.

Custom Home Market Share Still Lower Than Previous Highs

Although it accounts for 19% of all single-family homes constructed, the custom home sector has yet to return to its previous levels. The highest recorded percentage was 31.5% in 2009, and it reached 21% in early 2023.⁶

“Custom builds may represent a smaller slice of the market, but they’re often driven by financially prepared buyers who value control over layout and features,” said Brett Hively, Senior Vice President and Mortgage Capital Markets and Financial Strategist at Ameris Bank. “That’s where tailored financing solutions become essential.”

Challenges Exist for Custom Home Buyers

Despite positive trends, custom home buyers still encounter challenges in many markets nationwide. This includes a shortage of available lots, a lack of skilled workers for builders, and rising material costs. 

Building a custom home is typically more involved than purchasing an existing or tract home. The process often includes acquiring land, working with an architect to design a floor plan, securing permits and approvals, and hiring a builder to develop the lot and construct the home.

Financing can also be complex, involving construction loans, long-term mortgages, and personal savings. Buyers must account for land costs, design expenses, materials, and potential overruns—making early financial planning essential.

“We see the most positive borrower experiences when buyers engage their lender early in the planning process,” Hively said. “That can streamline the entire experience, ensure all financial aspects are thoroughly understood and managed, and keep them on track from blueprint to move-in.”


Sources:
^{1, 2, 3, 4, 6} https://eyeonhousing.org/2025/08/growth-for-custom-home-building/
⁵ https://www2.optimalblue.com/obmmi


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Ameris Bank does not endorse nor is affiliated with the companies listed in this article.