With no immediate end in sight for the housing downturn, home builders are focusing more of their attention on selling product and finding ways to squeeze profitability from smaller production volumes. To compete in this environment, manufacturers and other suppliers are going to have to adapt to builders' operational, product, and service needs.

Those are the main conclusions drawn from the answers of 304 builders who responded to an Internet survey that the NAHB's Research Center conducted between January 23 and 27. Ed Hudson, the Center's research director, offered a summary of those results during IBS in Orlando, Fla., this morning. He compared those results to a similar survey NAHB Research Center conducted in 2006, when "most home builders thought the [market downturn] was temporary," he said.

The more recent survey found that 40-plus percent of those polled said it was "very likely" that they would engage in more aggressive selling. This is especially true of production builders that, in the main, are struggling to rid themselves of excess unsold inventory.

Perhaps the greatest difference between the two surveys is the greater emphasis that builders are placing on the energy efficiency of their homes. Eighty percent of those polled said that it was either "somewhat likely" or "very likely" that their companies would promote that aspect of their products. Roughly the same total -- 78 percent -- said they'd likely favor building materials that offered the best value. (Interestingly, the respondents differentiated between "energy efficient" and "green" as only 55 percent of those polled said they were likely to play up the eco-friendliness of those houses. Hudson surmises that "green" is still a much tougher concept for builders to sell to buyers. Plus, "every material can be twisted into a green message," which only creates more confusion, he said.

The survey found that builders are more likely, in their selling and marketing efforts, to be watching what their competitors do more closely, and to establish closer ties with prospective buyers. (Somewhat incongruously, 55 percent of respondents identified "neater job sites" as something they believe would help to sell more houses, while under 50 percent thought improving their model homes would do the trick.)

Now that the downturn has taken hold of the industry, builders are more likely, in their selling and marketing efforts, to turn to real estate brokers, to spruce up and improve their web sites and to develop customer referral programs. Price reductions, while still a factor (62 percent of those polled have either adjusted prices or planned to do so), were less important than these other actions.

The highest portion of respondents -- 80 percent -- identified "free upgrades" as something they have either offered or planned to offer to counter declining sales, followed by allowing modifications to the homes being built, paying closing costs or points (which was also seen by respondents as being the most effective method of stemming a sales decline), and reducing prices.

When it comes to upgrades, the kitchen rules: Nearly three-fifths of those polled (and more than 70 percent of production builders) cited appliances as the product they were most likely to upgrade, followed by countertops (Hudson said that granite countertops gained the most market share of any product during the two years the surveys were compared), flooring, kitchen cabinets, and faucets/showerheads. On the flip side, upgrading exterior finishes such as brick or roofing is viewed as being far less effective for selling homes. (However, custom builders are generally two times more likely than production builders to offer free upgrades on exterior finishes, high-efficiency HVAC systems, and lighting.)

As they work on improving their selling techniques, builders have also refocused their attention, over the past two years, on improving their companies' operations, of which three quarters of the respondents were either somewhat or very likely to do. Other areas where builders want to upgrade their operations include reducing cycle time and improving the quality of their product.

Unsurprisingly, the survey also found a greater propensity among builders to want to renegotiate pricing with their suppliers. Builders are also looking around more for lower-cost suppliers and those that can bundle installation services along with what they sell. NAHB Research Center plans to release the full survey by March 15.