At the halfway point for the year, as we emerge from the confines of a global pandemic, the economy is recovering but Covid has left a mess of a supply chain in its wake. 2021 is as wild and unpredictable a year as 2020 turned out to be. From June of 2020 through January of 2021, the housing market was on fire. Resale values skyrocketed, demand reached a fever pitch and new homes were selling like crazy. But then came the lumber crisis which drove up the cost of building new homes to unprecedented levels. It was followed by supply chain disruptions in every direction and included a workforce trying to meet the demand but not quite succeeding. Every facet of home building that was once a minor concern, turned into a major one as the pandemic exacerbated them all.
Suddenly builders were putting caps on sales and raising prices so quickly and so high that sales slowed. Since February 2021 the story forming across builder websites is one that matches my hypothesis from the first quarter; the buying cycle is shortening with less online research being conducted and more in person activity transpiring. However, as we move into Summer, even the in person activity has slowed.
What seems to be happening is that freedom from the pandemic and a return to normalcy has resulted in a decrease in the sense of urgency for some home buyers. They’re armed with the knowledge of the lumber crisis and its effects on sales, they’ve seen historically low mortgage rates remain steady and gathering with friends and family, vacationing, and just plain enjoying the summer have taken precedence over buying a new home. The good news is that the demand is still there and this slowdown might just give home builders the time they need to catch up on building those homes.
The other effect of a post-pandemic life is that advertising costs have risen to pre pandemic levels as other verticals return to the space and compete with home builders for impressions and clicks. The numbers from the second quarter of 2021 are a reminder that while this market isn’t a bubble, it’s also not infallible.
2nd QUARTER 2021 HOME BUILDER WEBSITE TRENDS
Website traffic is considerably down for the second quarter of 2021 compared to the first quarter AND compared to the second quarter of 2020.
Goal completions were up compared to last year which is remarkable given the removal of click to call and click to email as goals during the first quarter of 2021.This means that not only were there more goal completions compared to last year, the goal completions were of a higher quality than last year. However, when compared to last quarter, goal completions were down by more than 20%.
The bulk of traffic remains on mobile devices and events were slightly increased from last quarter and last year, mostly due to image clicks. The decline in overall traffic is seen across sources: paid to direct, organic to referral, nary a source saw increases over the quarter or the year.
2nd QUARTER 2021 GOOGLE SEARCH ADS
The rising cost of advertising on Google Search resulted in fewer clicks and impressions when compared to last quarter and last year. The decline in impressions was greater than the decline in clicks so the Click Through Rate rose compared to last year and last quarter, though the quarterly gain was less than 1%.
As mentioned above, much of the increase in cost is due to increased competition as the world opens back up and people begin returning to their regularly scheduled lives. The rise from last year is more than 25% and from last quarter the cost increased a little over 10% to $1.35. These are still extremely competitive costs when taking into account the 2020 benchmark of $1.26
The other contributing factor is a declining search volume for new home builder related keywords through the second quarter. The good news with that is that so far in July, new home search volume is on the upswing. Less volume in the second quarter, meant a smaller market and therefore increased competition.
2nd QUARTER 2021 GOOGLE DISPLAY ADS
The decline in impressions and clicks is significantly more drastic on the Google Display ads side. More than 30% fewer impressions compared to last quarter and last year and nearly 50% fewer clicks. This disproportionately larger decline in clicks led to a decline in Click Through Rate to about .8%. Google Display is a super cost effective place for advertising and even at the second quarter cost of 41 cents per click, it’s a bargain. But those prices are up over 115% from last quarter and last year.
Keyword search volume is partially at play here, but overall, these shifts are mostly attributed to increased competition across the board.
2nd QUARTER 2021 FACEBOOK ADS
Facebook too suffered from the reopening of the world. However, this was compounded by the introduction and adoption of iOs 14.5 and ATT which allows people to opt in to or out of being tracked. Sadly, only 33% of people who have installed the update are opting into tracking.
Between these two factors, costs rose, impressions declined, and so did clicks compared to last year and last quarter. The decline in clicks was far more drastic between 1st and 2nd quarter than it was between this year and last year so the Click Through Rate improved compared to last year, but declined compared to last quarter.
When it comes to iOS, the Facebook proposed workaround is something called Conversion API and we are working diligently to implement it for our customers to prevent data loss and improve overall ad performance. Stay tuned for an official launch announcement.
CONCLUSION
After staring at and studying all of this data for a couple of weeks, one thing stood out to me overall and that was an increased need for top of funnel marketing efforts. You know how I’m always saying “a rising tide lifts all boats”, well, as builders have scaled back marketing and capped sales, some of the natural brand awareness that surrounds a busy housing market has declined.
If you find that your in person activity is starting to mimic your online activity, it might be time to consider investing in brand awareness campaigns from such top of funnel efforts as external eblasts, landing page campaigns on Facebook, and some good ‘ole Google display campaigns. You’ll soon find that other marketing ticks up as well and that activity begins to increase on your website which will ultimately lead to more in person visits.
The second quarter provided a bit of a slow down to the incredible home building market but the market shows no signs of a downturn, merely an evening out of performance to a more manageable pace.
