Pour the milk into a 2-quart saucepan and whisk in the milk powder and honey. Place over medium heat and bring to 180°F, then immediately remove from the heat and allow to cool to 110°F, 5 to 7 minutes.
Once the milk has reached has reached the target temperature, pour it into a cylindrical plastic container, reserving 1 cup. Whisk the reserved milk into the yogurt and add it back to the milk mixture.
Place the container in a narrow wine bucket lined with a heating pad. Set the heating pad to medium. Let the mixture ferment for 12 hours, without stirring, making sure the temperature stays as close to 110°F as possible.
After the fermentation is complete, refrigerate overnight. Pour off any whey that may separate from the yogurt as it sits. Store in an airtight container for up to 2 weeks.