The new home construction and sales industry has remained relatively untouched by technology and innovation compared to other economic sectors, but with recent breakthroughs in artificial intelligence (ai) major disruption is imminent. If you’re a home builder, take note – your industry is on the cusp of major technology-driven disruption. Here’s what you need to know to thrive in the coming years.
New Home Sales: The $300 Billion Unicorn Ripe for Innovation
Let’s start with some context on why new home sales is poised for an earthquake of change. This vital construction sector is a massive force, generating over $300 billion in annual sales in the U.S. alone. Yet when compared to other industries of this size like healthcare, finance, and transportation, residential building remains remarkably antiquated and inefficient in its operations.
In Silicon Valley tech speak, any untapped billion-dollar market is dubbed a “unicorn.” New home sales is the rare lingering unicorn yet to experience significant innovation. But not for long. Disruption targeting this lucrative sector is imminent.
With around 50,000 home builders across the country, there is no dominant player or standardized practices. The industry is heavily fragmented with a clear power vacuum, which creates ample opportunity for an ambitious disruptor.
The complex, customized nature of home building and the opaque new home shopping process has shielded builders from change thus far. But the tide is turning quickly. This creates both massive risk and opportunity for incumbent construction companies.
Younger Home Buyers Expect Digital Convenience
A key driver of imminent disruption is shifting consumer expectations. While convoluted new home sales processes may have been standard practice historically, contemporary buyers – especially millennials and Gen Z – are increasingly seeking streamlined, transparent digital experiences. After becoming accustomed to seamless online shopping and one-click purchases in other facets of life, dealing with a drawn-out, offline new home buying process feels jarring and antiquated for many prospects today.
Over the past two years, the pandemic has spurred rapid mainstream adoption of digital and virtual technologies as alternatives to in-person experiences across industries. However, many home builders still remain stubbornly tethered to traditional in-person sales tactics and physical tours. This resistance to digital modernization will likely frustrate and turn away contemporary buyers who now expect streamlined online shopping experiences.
Major Brands Raising the Bar
Prominent national homebuilder brands are rapidly waking up to these modern purchase preferences. Some are now selling luxury homes entirely through interactive digital models, without any physical homesites or communities built yet.
They leverage 3D visualizations and virtual walkthrough technology to simulate the home tour and buying process digitally. This level of digitization used to be a moonshot idea, but is quickly becoming a baseline requirement buyers expect.
While mega builders may have the resources to push this digital transformation, small and mid-sized construction companies will increasingly need to adopt comparable engaging technology and online personalization to stay appealing. Those regional builders who resist adapting risk disappointing and losing buyers to digitally-savvy competitors. Builders who embrace virtual selling platforms and customized digital experiences will gain a powerful competitive advantage.
Good News: Implementation Costs Are Dropping
The good news is technology costs are dropping across the board due to economies of scale. What used to be prohibitively expensive becomes affordable as demand rises. Home builders who make the leap now can get ahead of the curve before disparities in digital capabilities between builders become severely imbalanced.
While seismic change inevitably brings some risk and uncertainty, it also presents tremendous opportunity for construction companies able to adapt. Let’s look at several key strategies builders should consider to stay competitive in the years ahead:
This means forward-thinking builders who make the leap to add these capabilities early can get ahead of the curve before disparities in digital tool sets between builders become severely imbalanced. Those who delay action may find it nearly impossible to catch up down the road.
Combining Content and Data for Sales Success
Innovative home builders who successfully sell to today’s more technologically-oriented prospects will need to master two core capabilities:
- Developing Captivating Content – Leveraging interactive 3D home renderings, visually engaging customization tools, and innovative digital experiences to initially attract, engage and excite home buying audiences.
- Leveraging Integrated Data – Implementing customer analytics, behavioral tracking, and market research to gain insights into each prospect’s priorities, preferences and decision motivators. These insights allow builders to hyper-customize and tailor sales approaches.
Companies focused on just content or data in isolation will likely fall behind rivals who are excelling at both—combining digital tools buyers love with a deeper understanding of customer psychology and priorities. This fusion of compelling style and insightful substance will become essential as virtual new home shopping expands from niche to norm.
Harnessing Data for Hyper-Personalization
For example, advanced customer data platforms allow builders to closely track interest across floor plans, amenity options, home exteriors, locations, and more for each individual prospect browsing online or interacting in sales centers. Equipped with these analytics, builders can then tailor recommendations, pricing, promotions and messaging for each potential buyer based on their unique preferences in real-time.
This level of hyper-personalization and customization based on data-driven insights converts casual browser traffic into serious buyers far more effectively than a generic “one-size-fits-all” approach. The more builders know about their audience, the better they can serve them.
Enabling Seamless Omnichannel Consumer Journeys
Today’s home shoppers journey across multiple touchpoints—from builder websites one day, to sales centers the next, to email newsletters, social media ads and more. Savvy builders must strive to engage with prospects consistently across all of these online and offline channels to drive brand familiarity and continuity through the buying process.
New digital tools allow the customization and personalization enabled by content and data strategies to persist seamlessly as buyers proceed from initial online research to in-person tours and conversations. This omnichannel integration creates a steady streamlined experience.
Preparing for the Future of Residential Sales
Change inevitably takes time and dedicated resources to implement effectively. Given this reality, forward-looking home builders should take steps now to proactively evaluate current sales processes, pinpoint friction points, assess existing technology capabilities and digital readiness, and chart a roadmap to modernize systems to meet evolving consumer expectations in the years ahead.
Companies willing to undertake this level of strategic analysis—and then invest to enhance areas needing improvement—are far more likely to thrive amid the coming waves of prop-tech disruption. On the flip side, builders who delay serious preparation or downplay the scale of change risk falling irrevocably behind the curve as the industry undergoes technology-driven reformation.
The overarching message is clear – new home sales is on the cusp of major innovation-fueled transformation. Builders now face an important choice. They can either lean into coming prop-tech advances to dramatically elevate and customize the homebuyer journey…or sit on the sidelines observing as more forward-thinking disruptors reshape and revolutionize the entire sector.
Companies recognizing this inflection point and taking steps today will be poised to lead and profit from the prop-tech movement. The future remains unwritten – but proactive builders hold the pen. It comes down to whether they choose to author their own next chapter or let someone else dictate the storyline.
If you’re looking to transform your homebuilding business with innovative technology, reach out to our Director of Sales-Sara Williams to discover the benefits of Anewgo solutions.