Builder Confidence Soars in 55+ Market

by Chicago Agent

An index from the NAHB for the 55+ single-family market suggest only more positive developments for construction in 2012.

Builder confidence in the 55+ market posted big year-over-year gains in the first quarter, another sign of 2012 optimism in the construction industry.

Overall, the National Association of Home Builders’ (NAHB) 55+ Housing Market Index (HMI) increased 10 points to 27, which is the highest reading since the index was created in 2008.

Don Whyte, the chairman for the NAHB 50+ Housing Council, said the increases are part of a larger trend in construction.

“We continue to see increased optimism from builders and developers in the 55+ housing segment,” Whyte said. “We are servicing the largest growing group of buyers that we have ever seen in this age category, and it is a population that is dramatically different from what it was only a few years ago. This creates an opportunity for builders and developers in this market to create communities that address the specific needs of the 55+ consumer.”

A measure of builder sentiment in the 55+ single-family market, the HMI measures builder sentiment based on a survey that asks if current sales, prospective buyer traffic and anticipated six-month sales for that market are good, fair or poor (high, average or low for traffic).

The breakdown for the index’s individual components was just as encouraging: present sales rose 12 points to 27; expected sales for the next six months increased eight points to 32; and traffic of prospective buyers rose nine points to 26. The NAHB noted that though the numbers are still relatively low (an index number below 50 indicates that more builders view conditions as poor than good), each reading has now reached an all-time high.

The HMI also covers the condominium and rental markets. The condo HMI remained the weakest of the indices at 15, but that was seven points above 2011’s first quarter and an all-time high for the index. For the other sectors, present sales rose five points to 14, expected sales for the next six months increased seven points to 20 and traffic of prospective buyers jumped nine points to 15.

The rental index, unsurprisingly, continued to lead the way in the overall 55+ housing market, with present production climbing 11 points to 31, expected future production increasing eight points to 35, current demand for existing units rising three points to 42 and expected future demand increasing one point to 45, all signs of what continues to be the major focus of construction in 2012 – multifamily housing.

“Like the overall single-family housing market, the 55+ housing segment is facing a slow but steady recovery,” said NAHB Chief Economist David Crowe. “Consumers are starting to see the resale market show some improvement, which allows them to start thinking about moving into 55+ housing.”

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