Builder Confidence in 55+ Single-Family Market Still Low

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.

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. They may be 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.

The one measuring future demand went 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.

- Courtesy of NAHB