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Builder Confidence in Mature-Market Housing Falls

New data from a quarterly survey by the National Association of Home Builders’ (NAHB), 55+ Housing Market Index (55+ HMI), focusing on the association’s builder members in the mature-market housing sector, shows that builder confidence in the market has decreased during this year’s second quarter.  All areas surveyed dropped this quarter from the second quarter of 2009.

Factors that are contributing to these negative numbers include hesitant homebuyers, tight consumer credit, and competition from foreclosed and distressed properties. Most regions are experiencing a stall in the 55+ housing market, while older Americans are having difficulty selling their existing homes and therefore are postponing plans for new homes that would require less maintenance, downsizing, and different lifestyles.

The 55+ single-family HMI calculates builders’ outlook based on current sales, prospective buyer traffic, and anticipated six-month sales for the market. During the second quarter of 2010, HMI dropped four points from the second quarter of 2009, down to 12 points. Typically, any number of points over 50 is considered good conditions on the HMI scale. Present sales dropped from 16 to 12 points from 2009 to 2010. Expected sales dropped down to 17 in 2010 from 24 in 2009 and prospective buyer traffic dropped to 12, down from 14 in 2009. The 55+ multi-family condo index reached a record low this year at only seven points.

However, the current and expected demand for 55+ multifamily rentals is doing much better at 31 and 30 points respectively. The current and expected production is only at 15 and 16 points respectively. This means there is already, and will continue to be, a large demand for new rental apartments, but not enough production to support that demand.

Written by Kelly Mellott

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