Builder Confidence in 55+ Single-Family Housing Market More than Doubles in Q2

Builder confidence in the 55+ housing market for single-family homes more than doubled in the second quarter of 2012 based on the National Association of Home Builders’ latest 55+ Housing Market Index, released on Thursday.

The index reached its highest second-quarter reading since its inception in 2008, rising from 13 to 29 on a scale of 100. 

“Builders and developers in the 55+ housing segment continue to show increased confidence in the market,” said NAHB 50+ Housing Council Chairman W. Don Whyte in a statement. “As the share of 55+ households continues to grow in all regions across the country, we have a unique opportunity to create communities that address specific needs of the mature homebuyer.”

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The 55+ single-family HMI works by measuring builder sentiment based on a survey asking if current sales, prospective buyer traffic, and anticipated six-month sales for that market are good, fair, or poor. An index below 50 indicates more builders view conditions as poor than good, and while all index components remained below 50, NAHB says they increased “considerably” from a year ago.

Present sales more than doubled, from 12 to 30, while expected sales for the next six months increased 17 points to 35, and traffic of prospective buyers rose nine points to 22.

Not all 55+ segments are gaining ground at the same pace, however. The 55+ multifamily condo HMI is the weakest of all the 55+ housing market indices, but it is still experiencing upward trends. The overall index increased 11 points compared to one year ago to 19—the highest second-quarter reading since the survey began. 

All index components for the 55+ multifamily condo HMI increased compared to last year, as present sales rose 10 points to 18, while expected sales doubled to 20 and traffic of prospective buyers climbed 12 points to 19.

On the 55+ multifamily rental side, the index recovered “substantially” last year and have been holding steady into 2012. Present production climbed three points to 31, while expected future production also increased three points, to 32. Current demand for existing units dropped slightly, by one point, to 42, and expected future demand fell two points to 42.

“We are seeing buyers slowly return to the 55+ housing market as home prices begin to improve,” said NAHB Chief Economist David Crowe. “This helps unlock some of the pent-up demand from 55+ consumers who have been sitting on the sidelines until they are able to sell their current homes at a reasonable price.”

Written by Alyssa Gerace

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