Even in the face of a challenging environment marked by declining new-home prices and notably high inventory levels, many home builders are succeeding in significantly improving overall customer satisfaction in 2008 when compared with 2007, according to the J.D. Power and Associates 2008 New-Home Builder Customer Satisfaction Study released Sept. 10.

Overall customer satisfaction averages 779 on a 1,000-point scale in 2008, up 38 points since 2007. Markets experiencing the largest customer satisfaction improvements include Palm Beach, Fla.; Tampa, Fla.; and Albuquerque, N.M. In addition, overall satisfaction has increased in 28 of the 29 individual markets that were also surveyed in 2007.

“Home builders have adapted well to changes in the market that have necessitated a shift from an order-taking mode to an intensified focus on sales service and negotiation with prospective home buyers,” said Paula Sonkin, vice president of the real estate and construction industries practice at J.D. Power and Associates. “What is particularly impressive is that many home builders in areas where sales and home values have been most negatively impacted by local market conditions – for example, Nevada, California, and Florida – fare well in the study, with the majority of markets in these states performing above the 33-market average.”

“Strong home-building companies have recognized the importance of offering superior product quality, delivering homes on time, and providing skilled sales staff in order to excel in hypercompetitive markets,” said Sonkin. “With more negotiation occurring during the sales process, home buyers are receiving larger sales incentives. In addition, upgraded features that used to be considered options – such as granite countertops – are now being included as standard, which increases the perceived value of the home and subsequently results in increased satisfaction. With new-home prices on the decline in many areas as well as larger inventories and renewed efforts of home builders to truly delight customers, it’s a great time for consumers to consider buying a new home.”

Overall customer satisfaction

The New-Home Builder Customer Satisfaction Study, now in its 12th year, includes satisfaction ratings for builders in 33 markets. Nine factors drive overall customer satisfaction with home builders (listed in order of importance): builder’s sales staff (15 percent); builder’s warranty/customer service staff (15 percent); workmanship/materials (14 percent); price/value (14 percent); home readiness (13 percent); construction manager (13 percent); recreational facilities provided by the builder (7 percent); builder’s design center (6 percent); and location (4 percent).

Pulte brands (which include Del Webb, DiVosta Homes, and Pulte Homes) rank highest in customer satisfaction among new-home builders in 11 markets. Besides the Pulte brands, other builders topping market rankings include (in alphabetical order): Cambridge Homes (which is part of D.R. Horton and ties with Lakewood Homes and Pulte Homes in Chicago); Centex Homes (headquartered in Dallas, Texas); Darling Homes (Frisco, Texas); David Weekley Homes (Houston, Texas); Eastwood Homes (Charlotte, N.C.); Granville Homes (Fresno, Calif.); John Wieland Homes and Neighborhoods (Atlanta, Ga.); Lakewood Homes (which ties with Cambridge and Pulte Homes in Chicago); M/I Homes (Columbus, Ohio); Medallion Homes (San Antonio, Texas); Minto Communities (Coconut Creek, Fla.); Shea Homes (Walnut, Calif.); Standard Pacific Homes (Irvine, Calif.); Tim Lewis Communities (Citrus Heights, Calif,); and Trendmaker Homes (which is part of Weyerhaeuser Real Estate Company and headquartered in Houston, Texas).

“In 2008, a wide variety of home builders perform well,” said Sonkin. “In the midst of the volatility that has defined the overall housing market during the past two years and has caused several home-building companies to go out of business, many local and regional builders have seized the opportunity to attract and serve potential home buyers.”

The proportion of homes delivered both completely finished and on time has increased to 70 percent in 2008 from 58 percent in 2007. Furthermore, the percentage of home buyers who report that construction on their new home was finished when they signed the sales contract has increased to 39 percent in 2008 from 32 percent in 2007.

“Green” home features

The study finds that 28 percent of new-home buyers perceive that their home is environmentally friendly, but a vast majority of these home buyers – 75 percent – say that their home builder did not identify the home as “green.” The top green features that home buyers believe a new home should include are: energy-efficient heating and air-conditioning units, energy-saving appliances, energy-saving lighting, and temperature-controlling windows.

Sales incentives

The study also finds that more than nine in 10 new-home buyers (92 percent) report receiving sales incentives. Among home buyers who report receiving incentives when purchasing their homes, the average sales incentive totaled more than $16,500. The types of incentives that home buyers report receiving most often include a reduction in the base price of the home and credit toward options and upgrades.

2008 new-home design study

The J.D. Power and Associates New-Home Design Study measures customer experiences in 33 markets with design and aesthetic aspects of the new homes. Eight factors drive satisfaction with new-home design: floor plan (17 percent); master/primary bathroom (15 percent); kitchen (13 percent); ability to customize (13 percent); interior comfort/environment (12 percent); flooring (11 percent); exterior architectural design (11 percent); and windows and exterior doors (8 percent).

Overall satisfaction with new-home design has increased to 782 on a 1,000-point scale in 2008, up 36 points from 2007. Compared with 2007, the importance of the floor plan has increased in 2008. In addition, the flexibility and ability of builders to make non-standard design changes, such as relocation of an interior wall, is a particularly important new component in satisfaction with new-home design.

Pulte brands achieve the highest ranking in new-home design in six markets. Other builders topping new-home design market rankings include (in alphabetical order): Beazer Homes (headquartered in Atlanta, Ga.); Cambridge Homes (Ft. Worth, Texas); Centex Homes; Darling Homes; David Weekley Homes; Drees Custom Homes (Ft. Mitchell, Ky.); D.R. Horton (Ft. Worth, Texas); Eastwood Homes; Granville Homes; John Laing Homes (Irvine, Calif.); John Wieland Homes and Neighborhoods; KB Home (Los Angeles, Calif.); Medallion Homes; Meritage Homes (Scottsdale, Ariz.); M/I Homes; Minto Communities; NV Homes (which ties with Pulte Homes in Philadelphia); Shea Homes; Standard Pacific Homes; Tim Lewis Communities; T.W. Lewis Company (Tempe, Ariz.); and Winchester Homes (part of Weyerhaeuser Real Estate Company and headquartered in Bethesda, Md.).

The study also measures the occurrence and impact of construction problems experienced by new-home owners in 33 markets. The study utilizes an index that takes into account the number of problems that occur, the severity of the problems, and size of the home. It covers 41 different problem categories for the following aspects: bathroom, drywall, electrical/appliances, flooring/stairs, home exterior, interior paint, kitchen, windows/doors, and other significant problems.

Centex Homes and Pulte brands each rank highest in new-home quality in seven markets. Other builders topping new-home quality market rankings include (in alphabetical order): Classic Homes (headquartered in Colorado Springs, Colo.); C.P. Morgan Communities (which ties with John Wieland Homes in Charlotte, NC); Darling Homes; David Weekley Homes; Eastwood Homes; John Wieland Homes and Neighborhoods (which ties with C.P. Morgan Communities in Charlotte); KB Home; Lennar Homes (Miami, Fla.); Mattamy Homes (Toronto, Canada); Medallion Homes; Minto Communities; Standard Pacific Homes; Trendmaker Homes; and T.W. Lewis Company.

Home quality has remained stable since 2007. The rate of customer-reported problems decreased in 2008 to 1,151 problems per 100 homes from 1,345 per 100 homes in 2007.

Source: J.D. Power & Associates

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