The story throughout much of the U.S. for the past year is that there aren’t enough homes on the market and too few new homes are being built to meet demand.

And that story’s not expected to change much in the immediate future, even though some homes are being built. In May, there were just under 1.17 million privately owned housing units authorized by building permits, according to the U.S. Census Bureau. But the number of similar permits is down nearly 5 percent from the previous month and close to 1 percent below May 2016.

So how does the construction industry turn itself around to meet demand? And can it be done affordably?

The answer may be closer than ever as companies throughout the world begin to incorporate different new technologies – not just smart features in homes, but also simulation to aid in better design and manufacturing techniques to reduce costs and improve precision.

“Most construction has been the same for thousands and thousands of years,” says William Sannwald, a management professor at San Diego State University with a background in construction. “But there has been, I think, a shift that technology has been able to impact construction, as far as design especially.”

[See: The 25 Best Places Please Are Moving to in the U.S. in 2017.]

For housing construction in particular, the race is on to find what form of technology – or combination of innovations – can effectively provide the needed supply of new homes at an affordable price. Here are three ways new tech is inching its way into the industry.

3-D Printing

In February, a company called Apis Cor, based in San Francisco and Russia, constructed the first on-site 3-D-printed house in Stupino, Russia. The house, primarily made of concrete and built in less than 24 hours, is about 125 square feet and cost $10,134.

Apis Cor’s website describes the company’s aim “to change the construction industry so that millions of people will have an opportunity to improve their living conditions.”

Of course, the ability to quickly print what most would consider tiny houses within a day may be a better answer to developing nations experiencing a far more dire housing shortage – with many of the poorest citizens unable to find or afford adequate, safe shelter – than the current situation in the U.S.

For general building construction purposes, it may be difficult to imagine a 3-D printer large enough to construct a building larger than a few hundred square feet. But 3-D printing could easily be applied to the construction of materials or parts such as walls, flooring or furnishings for larger properties down the line.

Virtual Reality and Modular Construction

Newly developing technology, 3-D printing included, may be incorporated into the construction process in any number of ways in the future. Portions of homes or furnishings and appliances could be constructed with 3-D printing, reducing the number of hands and, ultimately, the cost to complete a home.

Already, virtual reality is helping to streamline the real estate design process.

In Des Moines, Iowa, development of the new hotel Hilton Des Moines Downtown is currently underway, and during the construction, architects, designers and builders have used virtual reality to see and edit the space before it is physically completed. They can try out materials and finishes through virtual reality, rather than making costly decisions based on small samples.

Ryan Tousley, assistant project manager for The Weitz Company, a general contracting company that is design-builder for the Hilton project, says the use of virtual reality to finalize the design and know the exact placement of appliances, plumbing and electricity has allowed all the hotel room bathrooms to be prefabricated and brought to the site in a completed form.

[Read: How Amazon Echo and Other New Tech Could Transform the Renter Experience.]

While prefabrication of an entire room may not be commonplace yet, there is already an increased ability for off-site, partial construction of a room, pipe system or walls to ease on-site construction. It also helps to cut down on the cost of custom construction for pieces that could be manufactured instead, Sannwald says.

“A lot of the work is being done in a factory and being shipped out to the job[site],” he says.

Tousley says he sees similar forms of virtual reality and manufacturing for design and pre-construction becoming the norm in the next few years, particularly as the use of virtual reality becomes less expensive for builders. “Modular construction is where the industry is trending to,” he says.

Vertical and Horizontal Expansion

While individual technological advances are important, the way a company is able to use them to make an impact also plays an important role. One struggle of the construction industry’s ability to adopt new technology up until now has been the fact that building and construction is largely local, Sannwald says, aside from a handful of national companies.

But that’s changing, he says, as larger firms are buying up some of those smaller, local companies. While it reduces the amount of local competition, it also means new technology can be incorporated on a much larger scale and to the benefit of more consumers at once.

“That’s going to lower your costs, because your experience curve will go down – you’ll be able to use some techniques and some systems in one place, and use them around the country,” Sannwald says.

[Read: Housing Bubble Ahead? Analysts Don't Think So.]

Other firms look to streamline costs by handling every step of the design and construction process in-house. Katerra, a Seattle-based general contractor currently focused on apartment and condo properties, strives to incorporate new technology to improve the design, manufacturing of materials and project management – and ultimately streamline the entire construction process. With the design portion of the company launching just 18 months ago to join the construction management and materials services, end-to-end projects like a senior living community in Kirkland, Washington, are currently in the design phase.

Craig Curtis, head of architecture at Katerra, describes the firm as a technology company first, focused on applying innovations to the construction and architecture world. With extensive experience in all aspects of construction as well as supply chain and manufacturing, employees dedicate a greater deal of attention to how technology can transform the process, "the way Tesla approached manufacturing automobiles," Curtis says.

While the successful integration of technology would likely ultimately bring down costs for consumers – not just in the design and build phase, but also in operating and maintaining spaces through smart home technology – Curtis says the goal is improvement: "This is not about doing things cheaper, it's about doing things better and more sustainably."

Corrected on June 23, 2017: A previous version of this story cited a Katerra project that is no longer in progress.

Corrected on June 27, 2017: A previous version of this story incorrectly stated Ryan Tousley’s title. He is an assistant project manager.

Tags: real estate, housing market, housing, renting, home prices, technology


Devon Thorsby is the Real Estate editor at U.S. News & World Report, where she writes consumer-focused articles about the homebuying and selling process, home improvement, tenant rights and the state of the housing market.

She has appeared in media interviews across the U.S. including National Public Radio, WTOP (Washington, D.C.) and KOH (Reno, Nevada) and various print publications, as well as having served on panels discussing real estate development, city planning policy and homebuilding.

Previously, she served as a researcher of commercial real estate transactions and information, and is currently a member of the National Association of Real Estate Editors. Thorsby studied Political Science at the University of Michigan, where she also served as a news reporter and editor for the student newspaper The Michigan Daily. Follow her on Twitter or write to her at dthorsby@usnews.com.

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