Builders’ and Remodelers’ Use of Information Technology

March 1, 2013

By Paul Emrath, Ph.D.

Economics and Housing Policy

Report available to the public as a courtesy of HousingEconomics.com

In the late 1990s, monitoring the adoption of information technology within the residential construction industry meant tracking how many builders had begun to use the Internet. But by 2000, this was no longer much of an issue. At that time, over 90 percent of builders were reporting that they had access to the Internet and were using it for a variety of purposes in their businesses.[1]

Since then, the world has changed significantly. Mobile devices have proliferated, offering different tools for communication and accessing the Internet. Software applications designed for use on these devices have also proliferated, giving businesses new options for managing their internal operations and interacting with customers. It’s now become standard practices for even relatively small businesses not only to visit web sites on a regular basis, but to maintain sites of their own on the Internet.

So when NAHB revisited the use of information technology in its periodic surveys of builders and remodelers,[2] it was necessary to develop a new set of questions. The questions, which were introduced on surveys toward the end of 2012, covered the devices and applications builders and remodelers use, what the technology is used for, how long companies have had their own web sites, what they provide on the sites, and how effective the sites have been in attracting new business.

Results from the questions on the effectiveness of web sites proved to be particularly interesting, suggesting that it may be possible for some remodelers and small builders to at least double the share of business they get from their web sites by following the lead of larger builders and providing 1) downloadable brochures, and 2) if they’re builders, information on the value of buying new homes on their sites.

Other results from the surveys include the following:

  • Over 80 percent of both single-family builders and remodelers use smart phones and desktop computers; over 70 percent use laptops in their business.

  • The most common ways builders and remodelers use this technology is for internal management of their business, to manage individual projects, and for communications with staff.

  • So far, only about one-fifth of builders and remodelers use information technology to track customer satisfaction, and to allow customers to track progress of a project.

  • Facebook and LinkedIn are two most common social media platforms used in the industry.

The following sections describe the surveys and discuss the results in more detail.


Surveys on the Technology and Its Uses

NAHB canvasses its single-family builders once a month in the survey for the NAHB/Wells Fargo Housing Market Index (HMI), and its residential remodelers once a quarter in the NAHB Remodeling Market Index (RMI) survey. The main purpose of each survey is to collect the information needed for the HMI and RMI, respectively, but each survey also often includes a set of special questions on a topic of current interest to the industry. The 4th quarter 2012 RMI and February 2013 HMI surveys each incorporated the new questions on information technology. A total of 402 builders and 447 remodelers responded to the two surveys.

The results show that the most common types of information technology in the residential construction industry are smart phones, desktop computers, and laptops—each used by over 70 percent of builders and remodelers (over 80 percent, in the case of smart phones and desktops). Next comes a group of devices and applications used by well over one-fourth —but well under one-half—of builders and remodelers. The list includes Ipads, standard cellular phones, mobile apps provided by manufacturers, and GPS. So far, tablets (excluding Ipads) and voice over Internet Protocol (a technology that lets you to make phone calls over computer networks, including the Internet) have penetrated the residential construction market only to a limited extent (Figure 1).


Figure 1. Types of Information Technology Used

There are few substantive differences between builders and remodelers in the use of particular types of information technology. The largest is a greater use of GPS by remodelers, possibly reflecting the relative difficulty of locating isolated addresses in existing neighborhoods vs. construction sites in a new subdivision.

So far, builders and remodelers have used information technology more for managing internal operations than for interacting with customers. At least 80 percent of builders use the technology for internal management of their businesses, management of individual projects, and internal communications with staff. About half use the technology to select products and to help make client presentations. After making presentations, further use of the technology to interact with customers—either by allowing customers track progress of a project, or allowing the builder to track customer satisfaction after the project is completed—is limited to about 20 percent of builders (Figure 2).


Figure 2. How Information Technology is Used

Like Figure 1, Figure 2 shows relatively few differences between single-family builders and remodelers. Compared to the builders, remodelers are slightly less likely to use technology for staff communications, but slightly more likely to use the technology for client presentations and product selection.

Some of even these relatively small differences may be attributable to underlying differences in the size and nature of the businesses involved. The average single-family builder has 9.5 employees on staff, compared to 6.0 for the average remodeler.[3] And, compared to new construction, the selection of particular building products is somewhat more likely to be turned over to the customer in a remodeling project.[4]

There is one notable difference in the use of technology by very large builders (those who started at least 100 homes in 2012). Although there are relatively few builders in this size category, and they therefore tend to have on relatively small impact on the percentages shown in Figure 2 (which are straightforward percentages of respondents, not weighted according to the number of homes they build or any other criteria), nearly half (47 percent) of the builders with at least 100 starts use information technology to track customer satisfaction.

At this time, we have no information on whether economies of scale may make it feasible for larger businesses to track customer satisfaction, or if some larger builders are simply moving ahead of the rest of the industry in their decision to apply information technology this way.

The most common social media platforms in the residential construction industry are Facebook, used by 80 percent of remodelers and 78 percent of builders, and LinkedIn, used by 68 percent of remodelers and 65 percent of builders (Figure 3). Other platforms are used, but Facebook and LinkedIn lead the alternatives by a wide margin. Once again in Figure 3, the graph shows few large differences between builders and remodelers.


Figure 3. Social Media Platforms Used

Company Web Sites

The NAHB surveys show that over 85 percent of both remodelers and single-family builders have web sites, and in most cases this is not a new phenomenon. Over two-thirds of them have had web sites for at least five years.

Nearly all of the builders’ and remodelers’ web sites provide company history, contact information and pictures of jobs. But there are some differences in a few of the less commonly provided items, depending on type of business. The largest differences are not between builders and remodelers, but between large builders on the one hand (those with at least 25 starts) and smaller builders and remodelers on the other. In particular, large builder’s web sites are much more likely to provide material marketing the benefits of buying a new home (remodelers answered an equivalent question on marketing the value of remodeling a home), downloadable brochures, and virtual tours (Figure 4).


Figure 4. Items Provided on Company Web Sites

Another noticeable difference between the web sites of different companies is that smaller builders and remodelers get only 10 to 12 percent of their customers from their web sites—compared to 35 percent for builders with 25 or more starts (Figure 5).


Figure 5. Share of Business that Comes from Company Web Site

We have seen that, compared to smaller builders and remodelers, builders with at least 25 starts put additional materials on their web sites and generate more business from the sites. That raises an obvious question about whether smaller builders and remodelers could get more customers from their web sites by expanding into some of the features more common on the large-builder sites.

In the case of downloadable brochures and marketing the benefits of buying a new home, the answer appears to be yes. Between 30 and 40 percent of builders with fewer than 25 starts provide downloadable brochures and market the value of buying a new home on their web sites (compared to 69 percent for the larger builders), but those who do get a larger share of businesses from their web sites compared to other builders of the same size class.

Builders with fewer than 25 starts who have a web site, but provide neither downloadable brochures nor material on the benefits of buying a new home on it, get only 7 percent of their potential buyers from the site. But the percentage more than doubles (to 18) for small builders who market the benefit of buying a new home on their sites, and more than triples (to 23) for those who provide downloadable brochures (Figure 6). Small builders who provide both downloadable brochures and material on the benefit of buying a new home get 27 of their potential customers from their web sites, starting to approach the 35 percent for larger builders.


Figure 6. Share of Buyers Small Builders Get from Their Web Sites by Items Provided on the Site

Among remodelers, the results are not quite as dramatic, but still significant. Although marketing the value of remodeling a home doesn’t seem to have a large impact, remodelers who provide downloadable brochures generate twice as many customers from their sites—18 percent—compared to 9 percent for those who don’t (Figure 7).


Figure 7. Share of Customers Remodelers Get from Their Web Sites by Items Provided on the Site

In the near term, company web sites are unlikely to replace more traditional methods for generating business. The largest share of web site customers in Figures 5, 6 and 7 is the 35 percent for large builders—which means that even they get 65 percent of their customers through other means. NAHB’s recently published What Home Buyers Really Want shows that consumers most often find contractors though referrals from friends or acquaintances, next most often through referrals from other contractors.

Nevertheless, some builders get a substantial share of their business from their web sites, and the evidence from NAHB surveys suggests that many smaller builders and remodelers could increase effectiveness of their web sites by providing downloadable brochures and, for the builders, information on the value of buying new homes on their sites.

Given the potential increase in business builders can apparently get from marketing the benefit of a buying a new home, they should be aware of the major study NAHB produced at the end of 2012 Lower Operating Costs Mean Buyers Can Afford a Higher-Priced Home—If It’s New, which shows that annual costs, especially for maintenance and energy, are significantly lower in new homes.

Other resources, including consumer flyers and guides are available in NAHB’s New Homes Month Toolkit. NAHB will update this site and post additional resources on the benefits of buying new homes in conjunction with the next New Homes Month, which occurs in April.


Footnotes

[1]Results from the survey used to generate the Wells Fargo/NAHB Housing Market Index, June 2000.

[2]NAHB’s builder members are divided into several categories, based on their primary business activity. Subsets include those whose primary business is building single-family homes, and those for whom it’s residential remodeling. For more information on the breakdown of NAHB’s builder members see the 2012 article Who are NAHB’s Builder Members?

[3]See the additional resources box in Who are NAHB’s Builder Members?

[4]See Figure 1 in the 2012 article Buying Products for Home Building & Remodeling: Who and Where.


Additional Resources

Print the Full Article

See previous Special Studies