New-home buyer satisfaction held its own in 2006, despite the housing slump that began in earnest that year, according to the 11th annual new-home builder customer satisfaction survey, released this morning from J.D. Power and Associates. Nationally, the overall customer satisfaction index score remained virtually unchanged since last year.

Taken in the spring of 2007, the survey was based on responses from 50,399 consumers who moved into their newly built homes in 2006 and includes satisfaction ratings for builders in 34 markets nationwide. It identified nine factors driving customer satisfaction with home builders. In order of importance, they are: the builder's warranty/customer service (16 percent); the construction manager (15 percent); the builder's sales staff (13 percent); home readiness (13 percent); price/value (12 percent); workmanship/materials (10 percent); recreational facilities (8 percent); builder's design center (7 percent); and location (5 percent).

Dallas-based Centex Homes received J.D. Powers' Platinum Award for Excellence in Customer Satisfaction, ranking highest in 14 of the 34 markets, more than any other builder in 2007. Pulte Homes, including its Del Webb and DiVosta brands, ranked highest in 11 markets. To qualify for the Platinum Award, a builder must be included in at least half the markets surveyed for the study, achieve above market-average scores for each division of the corporation, and earn an average index score above the 90th percentile of the study average. To be included in the J.D. Power survey, builders must sell at least 150 homes in a market.

"I agree pretty emphatically with J.D. Power's top line," says Centex Homes spokesperson Eric Bruner. "Even in a tough housing market, people can buy a quality home from Centex and be supported by quality customer service. In these market conditions, it's easy to lose sight of the customer relationship. I'm very excited that our Centex teams on the ground in so many markets still focus on putting the customer first every day."

Peter Keane, senior vice president home builder operations for Bloomfield Hills, Mich.-based Pulte Homes, said the company was still assessing its results in the rankings. "Overall, we're pleased with this year's results," Keane says. "The awards help us continue to focus on the individual areas of the business."

Markets experiencing the largest customer satisfaction improvements include the Central Valley, Calif.; Jacksonville, Fla.; Minneapolis; and Nashville, Tenn. Four markets - Albuquerque, N.M.; San Antonio; Ft. Myers, Fla.; and Austin, Texas - saw satisfaction scores take a major hit, dropping by 16, 15, 13, and 11 points respectively. A drop of more than 10 points is significant, and in the current home builder market, could reflect builders pulling out of markets, laying off staff, or having inexperienced staff working with customers, says Paula Sonkin, vice president of real estate and construction for J.D. Power.

Impact for Builders

With home readiness as one of the top factors driving customer satisfaction, customers don't necessarily perceive an abundance of inventory homes as a bad thing, says Sonkin. "With inventories up, builders were worried about consumers not having a choice, but inventory homes are on time and complete," she says. "In terms of satisfaction, they're not hurting builders."

The key message for builders from the customer satisfaction survey is that the roles of construction managers and salespeople have shifted dramatically, Sonkin says.

"The down market tells an interesting story," she says. "Five years ago, a builder would never hire a construction manager with the intent of him talking to the consumer. They didn't want buyers on the site talking to the construction manager; now they want that. ... Salespeople used to be order takers, now they're more involved in selling and negotiating. [Builders] need to pay attention to that."

The fact that the top three drivers in customer satisfaction - warranty/customer service, the construction manager, and the sales staff - are about people instead of products should serve as a wake-up call to builders about the importance of providing a quality experience throughout the home buying process, says Bob Schultz, a nationally known sales trainer and author of The Official Handbook for New Home Salespeople.

"When I read that, I said, 'Five stars, kudos, you're right on target,'" Schultz says. "We've always said it's not about the house, it's about the whole experience. This study confirms how important that is."

One interesting finding that wasn't included in the news release to the public, Sonkin says, is that builders can opt to greatly limit the number of options or changes available to buyers and still have excellent customer satisfaction - as long as the builder sets the proper expectations from the start. "You can be DiVosta and not have to make a single change," she says. "People know what they're getting and as long as they get it, they're happy. But the word 'maybe' is a problem, because to customers, the word 'maybe' always means 'yes.' You can't follow 'maybe' by a 'no.'"

Three New Surveys

This year's survey also included three first-time, breakout surveys on new-home quality, new-home design, and builder mortgage origination.

The new-home quality study measured the occurrence and impact of construction problems as they relate to customer satisfaction. The index takes into account the number of problems that occur, the severity of the problems, and the size of the home. The four areas that detract most from home buyer satisfaction are: sidewalk, driveway, and foundation cracks; crooked walls; visible carpet seams; and landscaping.

The study's key findings report that overall, home quality went up last year. In the 2007 survey, the average new-home buyer reported 13 problems with their house, a 7 percent decrease from 2006. New-home buyers in Minneapolis reported the highest new-home quality levels, averaging only seven problems per home. Buyers in Washington, D.C., reported the lowest quality with an average of 19 problems per home.

The inaugural new-home design study measures customer experiences and satisfaction with design and aesthetic aspects of the house. Seven factors drive satisfaction. In order of importance, they are: flooring (22 percent); master/primary bathroom (17 percent); kitchen (14 percent); interior comfort/environment (13 percent); exterior architectural design (12 percent); floor plan/layout (12 percent); and windows and exterior doors (10 percent).

In reading the numbers, Sonkin says, it's important to understand that the question wasn't 'How important is this feature?' but how buyers rated their satisfaction with the overall experience. "People who rate flooring high rate their overall satisfaction high," she says. "Because flooring is so prevalent throughout the house, it's a huge part of the design. You see it wherever you go."

The final new survey for 2007 was for builder mortgage origination, which measures the experience of new-home owners who used a builder-owned mortgage company to originate their loan. The survey found that the vast majority of new-home buyers get a mortgage through their builder when it's offered because of competitive rates and ease of the process. The three factors that drive satisfaction with the builder mortgage origination, in order of importance, are the loan officer or representative (40 percent), the closing (33 percent), and the application/approval process (27 percent).

With the meltdown of the subprime mortgage market and the increase in foreclosures, several builders have come under scrutiny recently for their mortgage origination businesses. A typical adjustable rate mortgage doesn't reset for at least two years, so none of the respondents would have experienced a reset when this survey was taken.

CTX Mortgage, the mortgage origination branch of Centex Homes, ranked highest in satisfaction in 12 out of 17 markets studied in the survey.

"For it being the first year to take a look at mortgage operations, we're very pleased with that," Bruner says. "To me, the results are all the more impressive with the current headline environment builders are dealing with on a daily basis."

Pulte Homes came in a distant second, with top rankings in three of the 17 markets. "That surprised us," Keane says. "I think our mortgage company does a terrific job. We really weren't affected by a lot of the subprime and alt-A stuff. We'll want to look at that."

For more information on the J.D. Power new-home builder customer satisfaction study, see the charts below or visit

JD Power 2007 New-Home Builder Customer Satisfaction Study

JD Power 2007 New-Home Builder Customer Satisfaction Study - Highest Ranked Builders by Market

Learn more about markets featured in this article: Dallas, TX.