Builder Confidence in 55+ Single-Family Market Still Low

According to the latest survey results from the National Association of Home Builders (NAHB),  builder confidence in the 55+ new home market remained weak in the third quarter of 2011, as the  55+ Housing Market Index (HMI) for single-family homes fell three points on a year-over-year basis, to 12.

The 55+ single-family HMI is a weighted average of three component indices, measuring builder sentiment on current sales, prospective buyer traffic and anticipated six-month sales in the 55+ single-family market.  Every index or component produced from the survey lies on a scale of 0 to 100, where a number greater than 50 indicates that more builders view conditions as good rather than poor.  The survey results are not yet seasonally adjusted, so numbers should only be compared year-over-year.

Although unchanged from a year earlier, the 55+ multifamily condo HMI remains very weak at 10. Among the 55+ condo HMI components, present sales dropped one point year-over-year, to 9, while expected sales dropped four points, to 10. Traffic of prospective buyers rose two points, to 11.

The continued weakness in the  55+ segment of the new home buying market is likely a result of potential buyers being  hesitant to commit to a purchase as they are concerned about selling their existing home at a fair price, due to low appraisals, competition with  foreclosures and tighter mortgage lending criteria.

Meanwhile, 55+ multifamily rentals remain the strongest segment of the 55+ housing market, with the index measuring present demand rising 12 points year-over-year to 40, and the one measuring future demand up 10 points to 42. Current and future production indices for 55+ multifamily rental units also jumped in the third quarter from a year ago, up 11 points (to 25) and 10 points (to 26), respectively.

For more information about NAHB’s 55+ HMI survey see  www.nahb.org/55HMI



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