NAHB: Builder Confidence Up as 55+ Housing Market Improves

The 55+ housing market saw gradual but steady improvement throughout 2011, says the National Association of Home Builders (NAHB), and this trend is expected to continue in 2012 as more baby boomers turn 55 and seek new homes and communities.

“NAHB is projecting that the number of housing starts in 55+ communities will increase 18% to 53,200 units in 2012, and another 25%, to 66,600 in 2013,” said Paul Emrath, NAHB’s vice president of survey and housing policy research, at the NAHB International Builders’ Show.

Despite this improvement, however, the market hasn’t recovered as quickly as might have been expected, and the market is still “fragile” as people continue to experience difficulties in selling their homes, Emrath continued.

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Home builders were slightly more confident in the 55+ housing market for single-family homes in the fourth quarter of 2011, with the index rising four points to 18 compared to the same period the previous year, according to the most recent NAHB 55+ Housing Market Index, released Feb. 7.

“We are seeing increased optimism from builders in the 55+ housing segment,” said NAHB Chairman Bob Nielsen in a statement. “However, the market still remains weak as many people in the mature-market sector are hesitant to buy. They are concerned about selling their existing home at a fair price, due to low appraisals, an abundance of foreclosures and tighter mortgage lending criteria.”

Builder sentiment is measured based on current sales, prospective buyer traffic, and anticipated six-month sales for each particular market; an index above 50 is an indication that more builders view conditions as “good” rather than “poor.”

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While the index remains in unfavorable territory, all components increased from a year ago:

55+ Single-Family Housing Market Index: Up four points to 18

  • Present sales: Up four points to 17
  • Expected sales for the next six months: Up two points to 26
  • Prospective buyer traffic: Up five points to 15

55+ Multifamily Condo Housing Market Index: Up six points to 14

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  • Present sales: Up five points to 12
  • Expected sales for the next six months: Up three points to 17
  • Prospective buyer traffic: Up five points to 15

55+ Multifamily Rental Housing Market Index

  • Present production: Up 17 points to 34
  • Expected future production: Up 12 points to 35
  • Current demand for existing units: Up 14 points to 42
  • Expected future demand: Up 12 points to 44

“As with the overall single-family housing market, we are seeing gradual, but steady, improvement in the 55+ market segment,” said NAHC Chief Economist David Crowe. “A level of 18 in the 55+ HMI is the highest fourth quarter reading since inception of the index in 2008, but still a long way from a healthy housing market. Also, as with the overall multifamily rental housing sector, the 55+ rental market is showing continued strength. All the index subcomponents are at or above their highs since index inception in 2009.”

Written by Alyssa Gerace