According to the National Association of Home Builders’ analysis of the latest Survey of Construction data, the custom home premium reached its highest level since 2011, at 12.6%. The custom home premium is the difference between what typical buyers pay per square foot for a contractor-built home versus a spec home.
For custom single-family detached homes started in 2025, the median price increased to $171 per square foot. For spec starts, excluding improved lot values, the median was $152 per square foot, nearly unchanged from $153 a year earlier.
The reasoning behind the gap is clear. Median spec-home prices per square foot have effectively plateaued for four consecutive years, while median custom contract prices increased from $156 per square foot in 2021 to $171 per square foot in 2025, a nearly 10% gain.
While large production home builders may have advantages in purchasing and procurement, custom home builders have the advantage elsewhere. Recent data revealed custom home building is less sensitive to interest rates, making it a relatively bright spot in the current residential construction industry.
