Builder confidence in the market for new single family homes remained unchanged for a third consecutive month in December, according to a recent report by the National Association of Home Builders.

The NAHB's report goes on to say that many builders are working on scaling down their inventories while repositioning themselves for the time when market conditions can support an upswing in building activity – most likely the second half of 2008.

25-year sales and marketing expert Ray Melville, of the Sacramento, CA-based Advantage Group, a new home consulting firm, says, however, that the building industry just doesn't seem to remember the lessons it learned from previous markets like this.

Melville's experience tells him that the industry in general does a poor job of selling product, making price the real incentive in a market like this.

He believes that the homebuilding industry has got to become more like the car industry -- where it's the monthly payment and the product they talk about -- in this case the home -- that is right for the buyer -- not slashed prices and huge giveaways.

Melville believes that consumers being driven to by incentives and prices alone may not end up buying the home they truly need nor truly want -- making it all about the deal and not about the home -- doing themselves a disservice as well.

Homebuilders, in the meantime, have gotten into the rut of "how low can we go?" in order to rid themselves of inventory.

How do builders change this destructive trend? Melville recommends that agent training and confidence are the real keys.

He says that the agents that work hard to differentiate themselves by selling to needs -- instead of being led by the nose by buyers motivated by fear to believe that the "deal" is the most important aspect of buying a home right now -- will succeed in this market.

He admits that agent confidence has a direct correlation to the amount of price-slashing that goes on as well as how much in incentives homebuilders routinely give away.

Published: January 2, 2008

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