Builder Confidence Declines in Third Quarter for 55+ Housing Market

November 15th, 2011 by DWM Magazine

Builder confidence in the 55+ housing market for single-family homes fell three points to 12 compared to the same period a year ago, according to the latest National Association of Home Builders’ (NAHB) 55+ Housing Market Index (HMI).

The 55+ single-family HMI measures builder sentiment based on current sales, prospective buyer traffic and anticipated six-month sales for the 55+ single-family market. A number greater than 50 indicates that more builders view conditions as good than poor. Among the index components, present sales dropped four points, to 11. Expected sales (six months into the future) dropped nine points, to 15. Traffic of prospective buyers rose two points, to 13.

While staying even compared to a year earlier, the 55+ multi-family condo HMI still remains weak with an index level of 10. Present sales dropped one point, to 9, while expected sales dropped four points, to 10. Traffic of prospective buyers rose two points, to 11, according to the NAHB.

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

“Multi-family rental units continue to be the bright spot in the 55+ housing market,” said NAHB chief economist David Crowe. “However, with demand currently running ahead of production, as it has been for several quarters now, the risk of a shortage of rental units in select markets in the future looms larger as builders continue to have trouble obtaining credit to finance new construction.”

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