After decades of resistance to modern innovations in construction, the residential home building industry is demonstrating a re-energized, dynamic shift in how it approaches homebuilding.

Addressing glaring challenges such as, labor shortages, generational disinterest in construction jobs, housing affordability, and defragmentation of the regulatory environment, the home construction industry is embracing change and innovation, recognizing the current detrimental situation.

“Dare to be Different“, the theme of PCBC 2025 — the trend-setting Pacific Coast Builders Conference — served as the rallying cry of this renewed dedication, as exhibitors, presenters, and keynote speakers were all on message.

The event included the newly launched Braindate — a networking program based on attendee-formed groups centered on common interests — the Innovation Stage that showcased Pitchfest, a startup competition hosted by the Housing Innovation Alliance, as well as several other innovative keynote speakers and industry experts.

What follows is a recap of the status of housing innovation for residential construction, based on various presentations and talks, as well as an overview of this year’s Pitchfest, whose finalists are all aiming to help address a myriad of industry challenges.

Table of Contents 

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Current US Housing Challenges

PCBC 2025, held in Anaheim, California, June 9-12, was overflowing with innovative ideas to improve residential construction inefficiencies and overcome persistent challenges.

So what are the challenges and trends, and where is the US residential construction industry headed?

The term “affordable housing crisis” has been used for decades, but its use has accelerated over the last five years, as many Americans have wrestled with buying a home in overheated markets, as prices rise beyond their financial reach. There are a number of factors keeping these prices unattainably high, all contributing to the main problem of supply versus demand.

According to 2025 data presented by Dejan Eskic — Director of Research and Education at Ivory Innovations, a non-profit at The University of Utah that catalyzes high-impact innovations in housing — 75% of US households cannot afford the median house price of new builds currently on the market.

Priced Out data map from NAHB and Ivory Innovations. Presented at PCBC 2025

Priced Out data map from NAHB and Ivory Innovations. Presented at PCBC 2025
Image courtesy of Ivory Innovations

Data, from the New Home Trends Institute, further reveals that 18% of buyers today are households without children, the highest percentage on record.

Over many years, newly built homes have become larger and more expensive, while households have become smaller. Some housing analysts believe that the trend of smaller families are primarily a result of financial insecurity around affording a sufficiently sized house for a family.

Average new home size vs. average household size

Average New Home Size vs. Average Household Size 1950-2022
Image courtesy of Ivory Innovations

However, data from The National Association of REALTORS (NAR), covering the past five years, does show a modest trend of decreasing median square footage for new construction.

Media square footage new and existing homes 2020 through 2024 NAR September 2024

Media Square Footage of New and Existing Homes 2020 through 2024 by NAR as of September 2024
Image courtesy of NAR

What is the underlying cause of the incongruity between residential production and affordable homeownership?

Housing Underproduction

Housing Supply has been identified as the key driver of the lack of affordable housing in America.

The Brookings Institution states that housing underproduction is a significant and ongoing issue in the United States. As of 2023, the nation faces a shortage of approximately 4.9 million housing units, a gap that has persisted for over a decade and continues to drive up home prices and rents. Underproduction estimates from other industry sources, such as NAR and Freddie Mac, range between 3.8 to 5.5 million units, respectively.

With the main issue identified, a novice observer could likely deduce: “solve the housing crisis by building more affordable homes faster!”

The problem is, there are a number of factors which are impeding the production of housing construction, that impact the ability to increase production and speed up time to market.

 

Key Causes of the Housing Shortage

There are several drivers that are impeding growth in the US housing supply:

 

Insufficient Construction

Despite recent increases in housing starts, the pace of construction has not kept up with demand. In 2024, approximately 1.36 million homes were completed, but this was still below the estimated need, leading to a continued deficit.

Housing Underproduction Map by State 2022 Data by UpForGrowth

Housing Underproduction Map by State 2022 Data by UpForGrowth
Image courtesy of Ivory Innovations

At 2024’s construction pace, NAR has stated that it would take 7.5 years to close the housing gap and reduce the supply gap.

 

High Construction Costs

Elevated material and labor costs, coupled with stringent zoning regulations, have made it challenging to build affordable housing, particularly in high-demand urban areas.

According to Zillow research, a key indicator of housing affordability is how strict a region’s land-use rules are. Those living in highly-regulated housing markets, as defined by the Wharton Residential Land Use Regulatory Index (WRLURI) are less likely to be able to afford the mortgage payment on a typical home in the given area. This is due to housing supply persistently falling short in localities with burdensome regulations.

 

Stagnant Household Formation & Wage Growth

In 2024, approximately 1.6 Million expected Gen Z and Millennial households did not form — households representing rental or purchased properties — primarily due to the lack of affordable housing options. This stat is also referred to as the Headship Rate, the rate at which the population forms new households. This metric has fallen for the 18–44 age range over the past decade. These missing households are also categorized as Pent-Up Housing Demand.

 

Regional Disparities

While some regions, like the South, are making progress in addressing the housing gap, others, such as the Northeast and Midwest, are only experiencing minimal improvements.

New Residential Construction Starts - US Census - 2012-2024

New Residential Construction Starts – US Census – 2012-2024
Image courtesy of the National Association of Realtors

 

Defragmented Regulatory Environment

One of the main contributors to housing underproduction is the defragmented regulatory environment in the construction industry. Oversight and regulation spread across multiple agencies and jurisdictions with varying codes, is impeding the adoption of new efficiencies within the homebuilding process.

The lack of consistency, coordination and efficiency in the approval, inspection and building of residential homes is a quagmire that needs fixing to deliver an ample supply of housing with minimal hindrance.

Defragmented Regulatory Environment Map of United States

Defragmented Regulatory Environment Map of United States
Image courtesy of Ivory Innovations

The image above is a graphic representation of the following entities:

  • 78,341 Local Jurisdictions
  • 39,555 Special Service Districts
  • 35,705 Cities
  • 3,031 Counties

These governing bodies then have a mix of control over the following approval areas:

  • Entitlement Process
  • Zoning
  • Building Codes
  • Permitting Process
  • Infrastructure Requirements

 

Aging Construction Labor Force

The average age of construction workers in the US is now 42 years, up from about 38 years in the early 2000’s. A significant share of the workforce is 50 years old and older, with a large retirement wave expected in the next 5 to 10 years.

The loss of institutional knowledge of skilled, older workers is a critical concern, as, simultaneously, many young adults, including high school students, are not pursuing career opportunities in the “trades”.

A large part of the workforce recruiting issue stems from a preference for white-collar, technology-related office jobs. In parallel, trade jobs suffer from unfavorable perceptions, as well as misperceptions, e.g.: physically demanding work conditions; safety concerns; insufficient work-life balance; minimal use of technology; low pay; low prestige; and employment instability.

Construction Labor Force Is Aging United States Labor Statistics

U.S. Trades Workforce Trends: 3 Age Groups
Image courtesy of Ivory Innovations

Here are a few research findings to counter the negative stigma and misperceptions pertaining to careers in the trades:

  • Nearly 90% of skilled tradespeople (including construction, electrical, plumbing, and HVAC workers) reported being “very satisfied” or “somewhat satisfied” with their careers, up from 83% in 2021. This is notably higher than the general U.S. workforce, where only 51% report high satisfaction. (Source: Angi’s Skilled Trades Report 2024)
  • Construction was identified as the “happiest” industry, based on data from over 57,000 employees across 1,600+ companies, with high fulfillment tied to tangible outcomes and work-life balance. (Source: BambooHR Survey 2020–2023)
  • Job satisfaction surveys of trades professionals also reveal that workers are not worried about being “automated out” by AI, an ironic way AI might further help the construction industry
Angi's Skilled Trades Report 2024 - What Pros want high school graduates to know

Angi’s Skilled Trades Report 2024: What pros want high school graduates to know
Image courtesy of Angi

Here is a sample set of organizations and programs that are addressing the labor shortage challenge (many more exist):

 

Barriers to Residential Construction Innovation

Even when builders commit to a culture of innovation and continuous learning with tangible levels of investment and training, adapting new ways of doing business is inherently fraught with risk and uncertainty. Impediments to progress can typically be categorized by Cost, Time, Logistics, or Organizational, such as:

  • Incurring higher costs for new products, tools or services
  • Encountering integration issues (internal/external/city)
  • Searching for the right solution for a particular need
  • Choosing innovation at the right stage or scale
  • Lacking sufficient commitment and incentives to take risks consistently and constructively
Barriers to Innovation Pro Builder Magazine Housing Giants Survey, 2024, 2025

Barriers to Innovation, Pro Builder Magazine Housing Giants Survey, 2024, 2025
Image courtesy of Ivory Innovations

 

Prioritized Areas of Innovation

Despite all of this dour news, innovation is happening!

Speakers from the Housing Innovation Alliance, Ivory Innovations, and Home Technology Ventures all colorfully accentuated this vital point to PCBC attendees. From the tone of the conference, one could easily sense the sense of pride in their collective missions and in the progress made.

The housing construction industry is indeed undergoing transformation to create affordable homes more quickly, that are higher quality, more efficient, and easier to manage out of necessity and renewed dedication.

Areas of innovation that are being embraced include:

  • Enhanced Design Tools
  • Easier-to-Use Collaboration Tools
  • AI-Powered Decision & Measurement Solutions
  • Easier-to-Install Materials
  • Resilient Materials
  • Off-Site Manufacturing
  • On-Site Assembly
  • Tools Leveraging Spatial Computing
  • Digital Twins
  • Safety-Focused Equipment & Protective Gear
  • Advanced Security Technologies
  • More-Efficient Building Methods
  • Reinvigorated Modern Home Designs & Amenities
  • Innovative Practices & Solutions
  • Strategic Partnerships

According to Eskic, the heart of current construction innovation largely pertains to technology that is improving the design process, such as:

  • CAD (Computer Aided Design): used for 2D & 3D Drawings
  • AI (Artificial Intelligence): automated mockups, measurements, and more
  • BIM (Building Information Modeling): used for 3D Interactive Visual Models
  • 3D Rendering, Virtual Models & Visual Databases (e.g. Digital Twins)
  • Virtual Visual Aids (e.g. Augmented Reality & Virtual Reality for virtual walkthroughs)
  • Spatial Computing: AI-powered solutions that interact with the 3D real world

According to the Pro Builder 2025 Annual Survey, 7.53% of the nation’s top builders view Off-Site Construction as an opportunity, a dramatic increase from 2.35% in the 2024 poll. We are optimistic that innovative home builders have been taking notice of the impressive progress being made by best-in-class prefab ADU manufacturers.

 

A Key Strategic Initiative: Cheating Time

One interesting concept that caught our attention was that of “Cheating Time”, a term that refers to accelerating construction processes through innovation and efficiency. By employing modern building methods, materials and other innovative and advantageous processes, building times are accelerated, and thus more efficient.

A key driver of this strategic goal is the highly anticipated increase in labor wages. Consequently, the industry is keenly focused on increasing worker productivity by incorporating better tools, technology, and processes that will eliminate unnecessary tasks, speed up completion times, increase reliability, and enhance safety.

Proof of the importance of “cheating time” is that the share of production builders investing in Research & Development/Technology departments has increased. Survey data from Pro Builder is implying that innovation is becoming a survival skill and no longer viewed as a “nice to have” capability.

Percentage of Production Builders Investing in Research & Development/Technology Departments for Innovation

Percentage of Production Builders Investing in Research & Development/Technology Departments for Innovation
Image courtesy of Ivory Innovations

Though this is a positive sign, Chris Langford, Managing Partner at Home Technology Ventures (HTV) — also one of the co-producers of Pitchfest — presented these stark stats:

  • The home construction industry has a 15X lower R&D spend than comparable industries
  • Output per worker has declined over the last 55 years

Here are specific examples of how “cheating time” is being addressed within residential construction:

  • Innovative Building Methods: Utilizing techniques like prefabrication, modular construction, and 3D printing significantly reduces construction time and costs
  • Technological Advancements: Implementing technologies like BIM (Building Information Modeling), drones, and AI helps optimize designing, planning, and executing, leading to fewer setbacks and shorter project completion times
  • Streamlined Processes: Improving logistics, communication, and workforce management allows for better coordination and faster workflows, reducing delays and oversights
  • Lean Construction Principles: Applying lean construction principles focuses on minimizing waste and maximizing value throughout the construction process, leading to improved efficiency and reduced material waste, leading to more sustainable residential construction.

More narrow examples of “cheating time” include:

  • Prefabrication: Building components off-site simultaneously with site preparation can dramatically reduce the overall project timeline.
  • 3D Printing: Constructing parts of a house with a 3D printer can be faster and less costly than traditional methods.
  • BIM and Digital Tools: Utilizing BIM software helps with project planning and visualization, minimizing potential issues and facilitating quicker, more accurate decision-making.
  • Alternative Construction Methods: Robots and robotics for roofing, inspections, mobile brick laying (Apis Cor), and more

 

Pitchfest 2025: Emerging Sources of Innovation

Pitchfest is a startup competition that showcases innovative housing-focused solutions, connecting up-and-coming companies with industry leading builders, investors, and potential partners.

The 2025 Pitchfest — held at PCBC 2025 this year — was co-produced/co-hosted by the Housing Innovation Alliance, Home Technology Ventures, and PCBC.

The event featured ten finalist companies pitching innovative housing solutions, live on the Innovation Stage, each of which is addressing at least one of the following major housing needs:

  1. Building more homes
  2. Making housing more attainable
  3. Reducing the environmental impact of homes
  4. Adapting current housing inventory
  5. Simplifying homecare

Being selected as one of the ten finalists is an impressive accomplishment in itself, as the rigorous vetting process involves:

  • Screening over 1,000 companies
  • Inviting a subset of 100 to 150 companies to apply
  • Reviewing 60 to 100 applicants from which to select the 10 finalists

All applicants were analyzed and judged across four key criteria:

  1. Innovation: how novel is the solution and easy to defend?
  2. Impact: how large of an impact would this make on the industry?
  3. Commercialization: can this solution scale within the next 5 years?
  4. Team Quality: does the team have the requisite skills & experience?

The finalists then vied to win one of three awards:

  • Investor’s Choice
  • Judges’ Choice
  • Audience Favorite

The investor winner received a $100,000 investment from Home Technology Ventures.

The following startups were selected as 2025 Pitchfest finalists:

  • Adept Materials: Innovates with a dual-layer coating system to optimize vapor, humidity, and temperature control in buildings.
  • Apis Cor: Utilizes mobile robotic systems for on-site 3D printing of concrete structures to streamline construction.
  • Aquaria: Generates thousands of gallons of clean water monthly by extracting moisture from the air.
  • Genia: Structural drawings in minutes, creates accurate, physically feasible home designs directly from floor plan inputs.
  • Hamlet: Uncovers what matters in every public meeting, provides a searchable database of U.S. county commissioner meeting data.
  • Nestment: Guides individuals toward homeownership through education and alternative financing options like co-buying.
  • Pallet: The leader in rapid-response shelter villages, designs and manages transitional shelter villages to support people experiencing homelessness.
  • Shovels: Makes building permit data widely accessible to improve transparency in construction processes.
  • Spacial: AI-generated structural & MEP plans, reviewed and stamped by a licensed engineer, and ready to submit.
  • XyloPlan: Disrupting fire pathways, offers data-driven insights into home wildfire risks with solutions to enhance structural resilience.

The three winning firms were:

  • $100K HTV Investment Choice: Spacial
  • Judges Selection: XyloPlan
  • Crowd Favorite: Nestment

During the Pitchfest awards presentation, Langford remarked that AI was a common variable among the diverse set of finalists. He also shared that an exciting capability of Spacial — the investment choice winner — is their ability to help builders “save months of time” with their AI-powered digital drawings.

Key Organizations Behind Pitchfest 2025 & Other Housing Innovation Initiatives

All of the organizations listed below deserve recognition for their commitment to fueling innovation within the home construction industry. They all have their fingers on the pulse of innovation and are worthy of following and supporting.

 

Parting Thoughts of Inspiration

We hope you are as impressed as we were to learn of so many valiant, concurrent, and inspiring areas of innovation within residential contruction and the progress being made.

Speaking on behalf of innovative homeowners everywhere, we further encourage new home builders of all sizes to place the adoption of digital twins near the top of their innovation initiatives. In short, digital twins can help you build better homes, more efficiently, with traits and amenities that homebuyers will value more than traditional alternatives. Real estate agents also need to educate themselves on this emerging market opportunity, as homes listed for sale with a corresponding digital twin will have a competitive advantage.

Homeowners of the near future will want to know everything about their homes, to the last detail. Robust digital twins will help homebuyers identify better quality homes, as well as empower homeowners to take better care of their properties over time, leading to higher comparable valuations. Without accurate digital twins — including service records and system/appliance “mileage” — too many homeowners will remain “in the dark” when it comes to buying homes and maintaining them.

Lastly, we leave you with three quotes that were shared with us at the end of Eskic’s state of innovation talk:

“Ideas won’t keep; something must be done about them.”
— Alfred North Whitehead, Mathematician and Philosopher

“The worst idea is one that sits on the shelf.”
— Dejan Eskic, Director of Research and Education, Ivory Innovations

“The worst thing we can do is be like everyone else.”
— Gene Myers, CEO, Thrive Home Builders

 

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