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3 New Rules of the New Housing Market

Housing recovery is happening – according to the CoreLogic National House Price Index, home prices are up almost 22% from their lowest point in 2012. And although economists speculate as to when the Federal Reserve will reduce its intervention, mortgage rates remain near historic lows. Combined, these factors are stimulating consumers to again buy and sell homes, driving growth in both remodeling and new construction sectors.

Although home improvement spending surpassed that of new construction during the recession, this trend began reversing in late 2012 (NAHB). Home building now shows strong signs of positive growth. On average, leading sources are predicting 23% growth in housing starts year-over-year for 2014. This growth is expected to continue into 2015 and beyond.

As new construction increases in priority for building product manufacturers, the approach cannot be a return to “business as usual.” In fact, in many ways, the rules have changed.


1. New Players = New Approach

Amid the economic downturn, builders had to adjust to a new consumer, empowered by information readily available via the internet. Increased competition due to a significantly smaller market forced sub-par businesses and contractors out of the picture, and seasoned business owners began contemplating retirement, bringing in new talent. Some of these new faces don’t even know what “business as usual” is and operate in the new reality that requires highly efficient, nimble processes.

2. One Size Does Not Fit All

Today, marketers’ approach to new construction must reflect the nuances of different types of builders. While big builders still represent a sizable proportion of home closings, they represent a very small percentage of building firms (HanleyWood Metrostudy, 2012). Therefore, this segment has a long sales cycle and requires a high-touch sales approach. They expect to work with brands that increase the salability of their homes, so consumer marketing, aesthetics and innovation are musts.

At the opposite end of the spectrum, custom builders (building 25 homes or fewer per year) represent almost 1/3 of home closings, but they make up over 96% of the building firms in the U.S. (HanleyWood Metrostudy, 2012). This allows for a more media-driven approach to influencing their consideration, along with support from distribution, dealer partners and, potentially, in-store merchandising.

And then there are those in the middle, which we have termed the “mid-tier builders.” They represent anywhere from 25% — 40% of home closings, depending on how this group is defined. For them, a strongly integrated sales and marketing approach is the key to influencing their consideration. This may also include supporting their marketing efforts with customized show-room or sales solutions.

3. Digital is Do or Die

Digital marketing should also factor into plans to reach builders. Research has shown that builders now regularly access the internet to assist in job-related functions – from staying up to date on new products to finding potential solutions for day-to-day problems. Many now even use tools like LinkedIn to network with other professionals. These technologies present opportunities for sales forces to more effectively build relationships with potential customers.

As you consider including home builders in your future marketing plans, remember – the dynamics of this market have changed, and it will take a focused, nuanced approach to reach the segments that will purchase your products. This means employing the right mix of sales, marketing and channel strategies that address both seasoned veterans and new up-and-comers entering the trade to generate and maintain interest in your brand.