Nearly Half of Home Builders Couldn’t Keep Up with 2021 Demand

ECI Software Solutions, a leader in cloud-based business management solutions, has released findings from a Residential Home Construction industry survey that examined the impact of economic challenges—such as supply chain delays and material shortages—on U.S. home builders and their expectations for business in 2022.

Throughout 2021, home builders were faced with a multitude of challenges as an output of the pandemic. Between increased demand for single-family homes and a lack of materials to meet those demands, home builders were faced with obstacles that were oftentimes out of their control.

According to the survey, four out of 10 (43%) builders admitted that demand outpaced their organization’s ability to meet it at some point in 2021. But despite a myriad of challenges, most home builders (55%) built more homes in 2021 than the previous year. And having managed through the pandemic for the past two years, they are optimistic for 2022: 72% expect to build more homes this year and of those, 23% expect to build much more.

Home builders ranked the pandemic as the number one threat to their business, which led many to implement various changes across their organization, like making more conservative financial decisions (42%) and increasing prices (38%). Not as many home builders increased their investment in technology (22%), which may have been helpful as they focused on meeting demand and maintaining margins. In fact, the builders who saw the most revenue growth in 2021 were also most likely to have increased their investment in technology to run their business, specifically: project management tools (68%), contract management software (54%) and CRM (54%).

As it relates to technology use in general, many home builders are not taking advantage of software and technology available to manage and grow their businesses. Among those who do, the most popular systems were project management (60%), home builder software (51%), contractor management (47%) and customer relationship management software (36%).

“It’s great to see that many home builders have managed through the supply chain chaos and labor issues of the past two years and are taking advantage of the huge demand for housing,” said Scott Duman, president of ECI’s Residential Home Construction Group. “Not all builders are coping as well, and there’s a case to be made for technology investments that can help them better manage operations and keep a tighter rein on supplies, schedules and costs. Home builders should also keep a close eye on interest rates and affordability and take caution for over-building.”

Additional findings:

• Optimistic about the market, almost 40% of home builders surveyed build entirely on spec, and another 23% are selling after structures are mostly complete (with limited options). This confidence may come from the housing shortages experienced across the country, most acutely seen in the Northeast (55%) and the West (66%). Now, over 60% of builders say the residential building market is growing in their state.
  
  
• When it comes to variances, materials (delays, shortages and waste) are the top concern for home builders in 2022, followed by estimates and schedules.
  
  
• Job sites are potentially sitting idle more than necessary—44% are idle for more than 6 days in a typical month.
  
  

This research was commissioned by ECI Software Solutions, based in Fort Worth,

Texas, which provides industry-specific business software solutions and services, focusing on cloud-based technologies. Researchscape surveyed 300 U.S. residential home builders in January 2022. For information, email info@ecisolutions.com, visit www.ECISolutions.com or call (800) 959-3367.