As the downturn in the industry offers builders fewer home buyers, lower home prices, and a far more competitive industry environment, the NAHB Research Center has released its latest Soft Market Study. More than 300 U.S. home builders, surveyed in January 2008, indicated a shift in emphasis since the beginning of the downturn in 2006 to green home building and energy efficiency from relationships with suppliers and subcontractors.
Just under half indicated they were expending “much more effort” on selling homes, with less focus on managing subcontractors, constructing and designing homes, and improving supplier relationships in the past two years. Increasing home energy efficiency was selected as the highest-ranking change in builder offerings since the downturn.
Whereas 50 percent of builders reported that their pre-2006 programs and improvement efforts were primarily aimed at quality assurance and cutting costs, less than 20 percent of respondents said they planned major cost-cutting efforts and quality assurance programs soon. The survey found the greatest shift was to the emphasis on green home building, with some 30 percent saying they planned to have a green building program soon.
The downturn seems to have accelerated trends in new homes, with increases in the use of granite for kitchen and vanity countertops, in addition to an increase in the use of both nickel kitchen faucets and undermount kitchen sinks. The use of solid wood front doors; fiberglass patio, side, and back doors; hardwood floors; stone exteriors; and solid interior doors also made gains over the 2005–2007 period.
The changing industry picture offers opportunities, and builders and suppliers of building products who adapt to the new environment stand to gain the most when the industry rebounds.