Here at Constructech, we have long talked about how market trends sometimes dictate technology trends. Construction is cyclical in nature—and I have covered many ups and downs. When the economy tightens, it is a good opportunity for construction professionals to either implement new technology or to leverage old technology in new ways to create greater efficiencies to better prepare for the downturn.
It seems this is exactly where we are once again in the residential construction industry today. I wrote about this a few weeks back when new data came out about the heavy civil construction market. The big takeaway there was the market is contracting. It seems the same case is currently being made on the homebuilding side of the construction market.
When looking at the homebuilding sector, according to the monthly HomeSphere/BTIG builder survey, sales continued to plummet in August, with 61% of builders reporting year-over-year decreases in sales. Traffic also remained slow—just 17% of builders reported year-over-year traffic increases, while 53% saw year-over-year declines (vs. 58% last month). The sales reading remains at a survey-record low, while traffic is the third worst reading of all time behind last month and the pandemic shutdown-impacted April 2020.
To adjust for this, homebuilders are moderating pricing activity and increasing sales incentives. In fact, the survey suggests 37% of builders lowered some base prices and 38% increased sales incentives on at least some homes.
I would also suggest builders can turn to technology during these times. Technology can play a very critical role in both good times and bad times. I would also argue construction is also one of the most resilient industries—and I believe in the months ahead technology will certainly help the trades and GCs be even more resilient in the face of adversity.
Consider this recent example. Greenheck recently launched a direct purchasing platform through a partnership with HomeSphere. Through an e-commerce portal, HomeSphere’s single-family homebuilders and their trade partners can purchase Greenheck’s residential ventilation and indoor air quality products directly, eliminating the need for buying groups.
This comes at an interesting time, when there is changing demand in the market in addition to an unstable supply chain. Technology initiatives like this prove anything can be overcome with the right partners and the right vision. As such technology will provide transparency into product availability—and will enable single family builders and trade partners to gain rebates. Again, this is simply one example.
Perhaps this is a good opportunity for construction professionals to identify the changes happening in the market and determine how technology might help improve efficiencies and the bottomline. If you don’t think about them now, the burden will only be greater and your margins will not look as positive as you have been enjoying these past couple of years.
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