How The Country’s Largest Builders Think About Construction Innovation
By: Jenna Louie, Chief Innovation and Strategy Officer
Introduction to ProBuilder’s 2024 Housing Giants Report
ProBuilder has released their 2024 Housing Giants Report, ranking the country’s largest single family home builders and providing insight into how these builders think about innovation within their companies. Three charts stand out with implications for how builders and startups work together to push construction innovation forward.
The analysis below was shared by Dejan Eskic in partnership with the Housing Innovation Alliance and ProBuilder.
The top factors driving construction innovation
According to builders, there are several key issues driving innovation – speed, reduced cost, gaining a sales advantage, and quality improvement. These factors outweigh other key issues impacting housing affordability, such as the skilled labor shortage and rising labor costs.
What are the top factors driving innovation in your business?
Source: ProBuilder 2024 Housing Giants Survey, Ivory Innovations analysis
Description: chart showing the top factors driving innovation for the largest single-family home builders
Most builders do not have a specific innovation lead
Only 25% of the largest builders have an innovation lead or department, suggesting that most innovation takes place within specific business units or divisions. For entrepreneurs selling to builders, this information highlights the importance of forming relationships with the division leadership in a particular geography in order to pilot or sell an innovative method or material.
Do you have aN R&D/Technology department to coordinate and lead innovation efforts?
Source: ProBuilder 2024 Housing Giants Survey, Ivory Innovations analysis
Description: chart showing builders with dedicated innovation departments or leads
Builders’ evolving innovation focus in the next 5 years
ProBuilders’ survey results characterize three areas of focus for innovation between now and the next 5 years: mainstream innovations, next wave innovations, and edge innovations.
Mainstream innovations
Most builders (65-70%) have already implemented software and technology innovations within their businesses, including back-of-house software, sales tools, and smart home integrations. Over the next 5 years, an estimated 85-90% of builders will have adopted these innovations. An example of this innovation could be PermitFlow, a 2023 Ivory Prize co-winner.
Next wave innovations
By 2029, over 40% of builders plan to focus on or adopt four additional innovation types – digital design tools, alternative construction materials, offsite construction methods and precut framing packages or kits. While adoption of these innovative solutions today is 20-35%, builders suggest that adoption will rise sharply to 40-60% over the next 5 years. An example of this type of innovation could be Volumetric Building Companies, a 2022 Ivory Prize winner, or Plantd, a 2023 Ivory Prize finalist.
Edge innovations
Today, only 5-15% of builders are focused on innovations involving Accessory Dwelling Units or automated construction methods (such as 3D printing or robotics). These innovative methods are projected to remain edge cases for most builders, with projected adoption rising to 15-25% over the next 5 years. An example of this type of innovation could be Diamond Age, a 2023 Ivory Prize winner.
In what areas does your company focus its innovation efforts or may do so within the next 5 years?
Source: ProBuilder 2024 Housing Giants Survey, Ivory Innovations analysis
Description: chart showing builder adoption of innovative products or solutions
Conclusion: The Future of Construction Innovation and Housing Affordability
We need a myriad of solutions in the construction industry to address housing affordability issues in the United States. The survey results above show why the largest builders in the country focus on innovation, how they do so, and where they are focused now and for the next 5 years.
Our focus at Ivory Innovations is to identify solutions on the leading edge of innovation, where we can support entrepreneurs working on those ideas which will take off in the next 2-5 years. If you’re an entrepreneur focused on innovating in the construction sector, we’d love to hear from you at info@ivoryinnovations.org.