November 14, 2011
Nation's Building News

The Official Online Weekly Newspaper of NAHB

Builder Confidence in 55+ Market Slips Three Points in Third Quarter

With buyers facing low appraisals, an abundance of foreclosures and tighter mortgage lending criteria, 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  NAHB 55+ Housing Market Index (HMI) released last week.

“The current state of the economy continues to affect buyers in the 55+ housing market,” said NAHB Chairman Bob Nielsen. “While potential buyers exist, they are hesitant to commit to buying a new home as they are concerned about selling their existing home at a fair price."

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 these index components, present sales dropped four points, to 11, during the third quarter; expected sales dropped nine points, to 15, and traffic of prospective buyers rose two points, to 13.

While staying even compared to a year earlier, the 55+ multifamily 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.

Alternatively, 55+ multifamily 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 indexes 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.

“Multifamily 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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