The Parallel Search of New and Existing Home Buyers

The home-buying journey is essentially the same for all buyers. It starts with dreaming about the lifestyle they want to live, getting their finances in order, and then figuring out what home features they desire. But what's most interesting, according to Zillow research, is that the idea of purchasing new construction enters the journey about midway through for both existing and new construction buyers.

Once buyers decide which type of home is right for them — new construction or existing — the rest of the process is virtually identical: contact a real estate agent, visit properties and neighborhoods, reassess their needs, and start touring and attending open houses.

According to the Zillow Group New Construction Consumer Housing Trends Report 2018, 38 percent of buyers include new construction in the list of all home types they’re considering. Eleven percent ultimately purchase a new construction home. Zillow conducted a supplemental study to understand this consideration/purchase gap. Study participants included existing home purchasers who seriously considered new construction during their search.

While the buyer demographic contains differences, the study revealed many similarities between the journeys of existing home buyers and new construction buyers.

What makes buyers take different paths?

Well, we know that for the minority of buyers who bring new construction into the equation very early on, it’s primarily because the never-lived-in aspect of new construction is so appealing. For the majority, new construction only enters the consideration set before they start to limit their housing options but after they know their budget, compile a list of desired criteria, start an online search and reach out to personal resources.

We also know that more than 3 in 4 people (78 percent) who purchase new construction homes consider them initially — versus only 30 percent of those who purchase existing homes. That’s a significant difference and it shows that once these buyers’ hearts are set on a new construction home, they consider very few alternatives.

There are opportunities despite challenges

Limited supply of new construction homes in the U.S., relative to existing homes, is likely a factor that helps explain why just 11 percent of all sales are new construction homes. But there’s still an enormous opportunity for builders to convert more home shoppers to new construction buyers. Interviews with study respondents who considered but eventually rejected a new construction home generated the following insights into what builders need to do to keep home shoppers engaged and confident in choosing new construction:

• Be open and honest when communicating.
• Meet with your staff regularly so that everyone is on the same page about home and community information.
• Offer proof of craftsmanship.
• Provide assurances of quality materials and that you’re not cutting corners.
• Maintain a strong online presence and provide new construction home shoppers with an outstanding experience.
• Connect with shoppers and buyers throughout the process.

Improve your online presence too

Buyers do everything online now — search for homes, explore upgrade options, research builder reputations — so it’s important to reach them there early in their journey. Invest in the best content and make an unforgettable first impression.

• Provide as much property information as you have; don’t skimp on the details.
• Offer at least 25 photos of the home and property.
• Use high-quality, color renderings, but swap them for photos as soon as possible.