AI in homebuilding is moving beyond experimentation, but the real opportunity isn’t in the technology itself. It’s how builders use AI to work faster, make better decisions and improve operations in an increasingly difficult business environment.
In this episode of Ten Minute Talks, HousingWire’s Allison LaForgia sits down with John McManus, VP of Homebuilding at HousingWire, to unpack where AI is creating practical opportunities across homebuilding. From creating consistent, usable data to improving velocity, precision and decision-making, John explains why the next phase of AI adoption will be how well companies integrate technology into everyday workflows.
#AIinConstruction #HomebuildingTrends #HousingInnovation
In this episode of Ten Minute Talks, HousingWire’s Allison LaForgia sits down with John McManus, VP of Homebuilding at HousingWire, to unpack where AI is creating practical opportunities across homebuilding. From creating consistent, usable data to improving velocity, precision and decision-making, John explains why the next phase of AI adoption will be how well companies integrate technology into everyday workflows.
#AIinConstruction #HomebuildingTrends #HousingInnovation
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00:11I'm Allison LaForgia, the Director of Multimedia at HousingWire, and on this episode of 10
00:17Minute Talks, I'm joined by John McManus, VP of the Builders Daily at HousingWire, to
00:24get his perspective on where AI and home building intersect, what trends builders should be
00:29paying attention to, and where this technology could have the biggest operational impact.
00:35John, thanks for joining me for an episode of 10 Minute Talks.
00:39Great to see you, Allison. Thanks for having me.
00:42John, I want to start with talking about some trends where coming out of several conferences
00:51and heading into fall conferences, so I want to lay some foundation work. When you look at the
00:59home building industry today, where do you see AI and technology having the biggest potential to
01:06change the way that builders operate? The short answer starts with home builders are facing
01:17challenge in their businesses. That's not different from any other going concern that has to make good
01:28customers, make a profit, and continue to be able to deliver products and services to the economy.
01:37Home builders have a marketplace in which the challenges have to do with multiple forces that
01:44are pretty much headwinds these days. They have to do with the cost of living challenges that
01:54households are going through. They have to do with policy framework that puts very, very big challenges on
02:04the immigration population, which is an important part of the home building workforce. There are economic
02:15issues that have to do with both the flow of goods from other countries into the U.S., so trade
02:24aspects that are in dispute and cause disruption, policy around mortgage rates, and then the issue of
02:35being able to have a customer that thinks that now is the right time to buy a new home. All
02:46of these things
02:47are the context that we're trying to answer this question. The first filter of impact related to your
02:58question is that everything a home builder does these days has to do with their balance sheet and what they
03:04invest in and what they commit to has to make sense in the time period that they're operating so that
03:12they can
03:12continue to be net profit margin positive. When we talk about AI, we're not talking about something that is
03:25anything except a business decision, a business improving decision or a business investment decision or a business
03:36commitment. So everything is not about AI hype. It has to be about AI being able to do something so
03:46that their
03:47operations, their strategies, their investment in land and other resources can
03:55be more efficient, smarter, more matched up to what the home buying customer would be looking for. So that's where
04:10we
04:11create the kind of context of our conversation, Alison. It's really about how there's no separation
04:18of AI from the fact that the business owners and chief executives and operations leaders need to consider every
04:29capability, every new capability, technology or operational in the context of how is it going to help my business
04:37now. So that's the starting place. I think that we are moving now beyond AI experimentation.
04:48to applied operational uses in the companies. And these companies have many workflows. They have workflows that have to do
05:00with being in the retail business, selling to consumers, manufacturing business, the finance business, the land speculation and real estate
05:10business, the supply acquisition business.
05:16So all of these different kinds of skill sets at a macro level are baked into what a home builder
05:24is.
05:25And so AI can play a very important role in all of those workflows and operations. It's just that it
05:33needs to represent being able to
05:38ultimately expend less of precious resource money, people's time and land and actually
05:50so expend less and improve more in terms of matching to that ultimate goal of
06:01a home buyer's home buyer's wherewithal and the household's wherewithal and the product that the home builder brings to the
06:10market.
06:11Now, John, you just touched on several points that are so important and I really think we could talk about
06:18this for 24 hours.
06:20Like there's no shortage of insight that you have about some of the operational wins across all of the different
06:27individual pieces that go into the very complex machine that home building is.
06:33And when you mentioned in your answer that a lot of the conversation really should be about working faster, making
06:42better decisions.
06:43Now, we know that AI is moving very, very quickly.
06:48What do you think that home building leaders need to understand about that technology now so that they can be
06:56prepared for where the industry is heading next?
07:00Another great question.
07:04And I think there's two parts to it.
07:06What do they understand?
07:10They understand that many of their operations require two important steps here.
07:21And one of them has to do with all of those workflows that I talked about in the first answer.
07:29There's so many concurrent workflows that are occurring pre-land purchase and pre-development through the design of the homes
07:43into the construction,
07:45the construction, start to completion cycle, all of the products and building materials and resources that need to be brought
07:57through some distribution channel to the job sites, the community sites,
08:03and then into this selling funnel and reaching consumers who are of different economic means and desires.
08:17So the intelligence around the customer right into the warranty and follow up relationship with the customer.
08:25So all these different workflows have ways that the home builders are in the last fairly recent period of time,
08:3610 years or so, recognized that they're all made of data.
08:40So that there's a plumbing to all these workflows that is made up of data, which is a relatively recent
08:48recognition on the part of many of these operations.
08:51They haven't thought in the past about their workflows being structured around data points.
09:01So the first step they have to go through, and this is the same with many other kinds of organization
09:07and mortgage and real estate and mortgage technology,
09:11where the company has to understand itself from the standpoint of a data system and recognize conventions and practices around
09:23what the data should be called.
09:26Is it synchronized so that everybody, even something like a window, a window means something from the standpoint of a
09:35home part and a product.
09:39But we know Windows have other meanings when it comes to software and other applications.
09:48So having a common data recognition for all these different things that can go by different names, that's the first
09:59job that the home builders have.
10:01The second job has to do with that other part of your question, which is where AI starts to have
10:09opportunity to impact those workflows.
10:13Once you have the plumbing where you have a sound understanding of the data, then you can start to understand
10:22where you can make improvements in either duration or access to less expensive, say, lumber or a land tract.
10:36So the data, once it's recognized and seen in its place in the system, you can start to see where
10:44there are opportunities where velocity, which is a big capability around AI, precision around certain kinds of characteristics, repeatability and
10:57things like that.
10:57That's where AI starts to come into play when you have a very rigorous, disciplined look at how data is
11:07the underlying aspect of the company.
11:10And one more thing that I think relates to your question is not only is AI galloping along, it's hurtling
11:20along in terms of technological development.
11:22We're talking about capabilities now in AI that were unimaginable 24 months ago.
11:30So that's changing very fast, but so too is the mindset of the user of the technology.
11:39So our ways of using AI, our ways of using chat GPT or any of the other ones, Claude, we're
11:52making it so that the product changes because we have needs that then go in and become part of the
11:59training of what the capabilities are.
12:02So what's changing exponentially is the way that the home builder team members at the strategic and operational and management
12:14and directorships, every part of the silo of finance and field construction and purchasing, all of these different users are
12:27part of an exponential change in how they use technology.
12:30So those two things are changing rapidly at the same time.
12:35Now, John, you touched on something that I think is so important and often something that gets glazed over in
12:43this conversation, and that is that the mindsets of the users are also changing.
12:48And it gets to a point where I think as an industry, people are really looking at actually adopting and
12:59furthermore implementing this technology into their workflows, like you said, to see some of those operational efficiencies and some of
13:09that velocity that people are hoping to have positively impact both their margins and their production time.
13:18And to improve their customers and to improve their customer experience overall.
13:23So what I want to pick your brain about next and sort of wrap up today's interview in is there
13:31are a lot of technology options that have a range of quality, right?
13:37And what I'm interested in your perspective on is how should people look at separating the wheat from the chaff?
13:45What trends really should builders be watching?
13:48And what do you think will separate the companies that successfully implement technology from those who struggle to keep up?
13:59You know, we had a great example with us when we had the AI Summit in Dallas a few weeks
14:06ago.
14:08A couple of great examples.
14:09One was a company, History Maker Homes.
14:12They're based in Texas.
14:14They were a home builder that's been around for almost 75 years.
14:18The strategic management had a question that was a business question, really asking, you know, will what made us successful
14:31to the first 75 years make us successful to 100 years?
14:38Okay, so they were asking a business question, and that led to very rigorous and holistic transformation of the answer
14:54of the question, who are they?
14:56So they had previously been a price-based home builder with great operations and production and ability to produce homes
15:09at a low price level, and that was their calling card competitively.
15:15They began to recognize that if they looked forward, that was not necessarily going to make for success.
15:23Yes, being an entry-level, low-cost provider, because competing at the low level is harder and harder these days
15:32because of the, you know, realm of competition from much larger companies who can be more efficient.
15:40They have cheaper capital and stuff like that.
15:43So in order to compete for the next 25 years, History Maker had to kind of take a look at
15:48what they were doing,
15:49and they decided that the customer that they were looking for was going to be the center of their world.
15:56And the customer they sort of fastened on was one that wanted quality and wanted value and wanted a more
16:07of a distinctive home and livability than a box that was very, very kind of standardized.
16:15So that really fundamental change in the answer to the question, who are we, led to the question, I mean,
16:25to the answer to the question, what do we want to produce?
16:28And so the homes were going to be different.
16:30And when we reached that answer, it meant that they had to change all of their processes, all of their
16:37systems, everything that was an operation that had to do with high-velocity, low-cost materials,
16:44all the ways that they were very competitive at the low price.
16:51Now they had to relook at and retool their whole operation.
16:56So that's where technologies, software that had to do with their resource planning and their workflows and operations and their
17:06connections from the finance department to the construction department to the customer relationship and the design of the homes,
17:15all of these things, all of these things, all of these things had to be connected in a holistic way.
17:20And to make those connections, they looked at technology and software and what we call tech stacks, where you would
17:27have layered solutions to the kinds of workflow systems that needed to be integrated and interoperable.
17:36And this is where we started to see AI have an opportunity to have an opportunity to have a great
17:43difference.
17:44That's where they got to where they were working with an AI provider, HighArc, which allowed them to design product,
17:53architecture, home plans that were the kind of product that they wanted to bring to market.
18:01So the ability to do those designs in a very sped up, but high quality way had not been out
18:11there before.
18:12And so that now they have the ability to generate those designs and then all of the data that goes
18:18into the design of the home is mapped back through the construction documentation to the products and materials that are
18:30acquired.
18:31To the specification of all of those materials.
18:35So you can get a complete data set with pricing on home instantaneously.
18:43And that allowed them to kind of reflow their operations so that they could do this on an elegant and
18:53systematic way, as opposed to being kind of a Rube Goldberg of people trying as hard as they can, but
18:59not always kind of being on the same page.
19:01So we get to this notion of a single source of truth where everyone is looking at the same document,
19:08whether you're in the home office, in the finance department, or out in the field on the construction site, or
19:15selling in the home sales model.
19:18Everybody has the same information now, and so everyone not only shares that and has synchrony with the sharing of
19:29it, but they're also feeling like they're more accountable because they're accountable to each other.
19:35Every single thing has to mesh in order, every single person has to mesh in terms of accomplishing goals.
19:41I know I'm going on long, but if we look at builders like that and they say, who are we?
19:48We want to be a customer-centric organization.
19:51We want to have products that reflect that and value that reflects that.
19:57Then we have to change how we do things from the inside out, and so that case is an excellent
20:04one of a strategic pivot that led to an operational pivot and a business pivot, and then that's where AI
20:11plays a very big role.
20:13On the other example that we had was in land.
20:17Chris Coakley, who is the VP of land for affordable housing at Century Communities.
20:24They have many, many communities across the country.
20:27They're looking for the locations where land would be for sale that matches up to the product spec and the
20:37pricing spec that they have for that Century Complete model, which is the entry-level model.
20:43What Chris talked about was that his team are very balkanized.
20:52They're entrepreneurial, and they work not as an operationally controlled group.
21:00They're sort of sparked on doing a lot on their own, and so AI has played an important part in
21:08their being able to get the greatest information they can in the marketplace they're operating.
21:13And then part of the aspect of buying land is having a relationship with sellers who prefer some builders over
21:24others, and what they prefer are builders that are going to understand what the land is about and have researched
21:32it and have understood what the –
21:34everything from the geographical and soil basis and land and entitlement and permitting and zoning, they want people to come
21:46to the purchase that understand what the land is about.
21:49And this is where AI can give people that kind of information when they're doing the research on how the
21:56land will fit into the product set, and it can improve the relationship between the builder who wants to buy
22:05the land and the land seller because they want a builder that understands how to value the parcel or the
22:13lots in the best way.
22:15So it makes it makes it so that the seller has the choice of dealing with the preferred builder, the
22:21one that is going to be the strongest builder.
22:25Those are two examples that we see, and we see similar in new home sales and marketing where sales associates
22:35have far more information.
22:37They're more strategic operators than order takers that they used to be.
22:43They have to have an understanding of the customers in the area, the competitive set in the area, the ways
22:49that people get information on all the different homes in the geographical area.
22:55And so AI is playing a really, really important part in the under the hood aspects, the plumbing, and the
23:02data that I was talking about earlier.
23:04John, I think I could ask you a million questions about the intersection of technology and home building and some
23:13of the operational trends that we're seeing and the development or even M&A to my audience.
23:20You can read all of John's coverage on the builders daily.
23:25He's genuinely one of my absolute favorite authors to read.
23:28He's so knowledgeable and his articles and his coverage reflect that John was on stage at the housing wire AI
23:36summit, and he will be back on stage again at the home builder summit in Dallas, Texas.
23:43John, thank you for giving me your time and for letting me ask you questions.
23:49Also for everyone who's listening in.
23:51I didn't send these to John in advance.
23:53This is his first take.
23:55He's that he really is that knowledgeable on all things home building.
24:00So John, thank you for a great conversation.
24:02I can't wait to listen to you more at the home builder summit in Dallas.
24:11We're of course.
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