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Making the Case for New Homes Over Used

Builder Homesite’s new marketing program targets buyers inclined to purchase new houses.

By: John Caulifield

Builder Homesite Inc., (BHI), an Austin, Texas–based consultant owned by a consortium of 32 builders, is testing a marketing and advertising program in Houston, Phoenix, and Washington, D.C., that promotes the benefits of buying a new single-family home, and which BHI intends to expand nationally in 2013.

New homes currently account for only 7% of all homes sold annually, or half of their historical levels. But BHI’s research found that 19% of people in the market for a house “are looking for new right off the bat,” Costello says. Another 35% are, in his words, “agnostic,” meaning they might buy new or used.

Costello believes builders have spent far too much time making excuses for why they aren’t selling more houses. Instead of wringing their hands about the economy and unemployment and tighter mortgage lending, builders would be better served if they had a stronger message for those buyers who are actively shopping and can be persuaded to buy new.

“We just want to get our fair share,” says Costello about new-home builders.

Last year, about 4.3 million existing homes and 318,000 new single- and multifamily homes were sold in the U.S. If builders could capture two-thirds of the customers who actually prefer buying new, their market share would rise to 13%, says Costello, and potentially to more than 25% if builders also captured at least one-third of the agnostics.

BHI’s marketing campaign “reinforces what we already believe to be true.” It is using online media primarily to emphasize the benefits of buying a new house, and to target buyers already leaning that way.

The consultant is preparing marketing materials for builders that will include tips on selling new homes, customized by market. Costello says that BHI’s research—which it gathered with help from Hanley Wood Market Intelligence, which is owned by Builder’s parent company—shows that new homes “tie or beat” existing homes in virtually all of the top 10 factors that buyers say are important to their decision, including energy costs, floor plans, and quality of construction/warranty.

These areas are what the marketing literature—which BHI will roll out early next year—will hit on, in order to move builders away from the kind of price-only sales pitch that has come to dominate their advertising. (When Builder spoke by phone with Costello on Monday, he was driving to Dallas, where along the way he saw several builder billboards, almost all of which “screamed ‘sale,’” he said.)

BHI’s campaign will also reach out to brokers and agents, to whom it will provide materials about new homes. In Phoenix, BHI has provided local multiple listing services with data on new homes, the lack of which has been one of the reasons why agents and brokers typically don’t show new houses.

John Caulfield is senior editor forBuilder magazine.




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