Single-Family Sales See Small Uptick; Future Expectations Stall
August 21, 2009 – Builder confidence for conditions in the market for 55+ housing rose slightly during the second quarter, according to the 55+ Single-family Housing Market Index released today by the National Association of Home Builders (NAHB). The 55+ HMI notched up one point in the second quarter to a level of 15, due to a gain in the current single-family sales component of the index, which rose three points to 15.
The current condo index dropped a point to an index value of 12, while the rental index remained at 27. The future-expectations components of all three 55+ indicators – single-family for sale, condos and multifamily for-rent – fell during the second quarter. All sectors expressed some uncertainty over the next half-year as single-family builders’ expectations for the next six months fell from 26 to 23, the condo builders’ expectations index fell from 20 to 17, and the rental producers’ index of expectations fell from 35 to 32. As a further indicator of softness in the market, the level of traffic by prospective single-family buyers fell by two points over the previous quarter, from 14 to 12; condo traffic fell from 15 to 10.
“The survey shows that builders are still cautious,” said David Crowe, NAHB chief economist. “They may be seeing a few green shoots as some sales pick up, but builders understand that the consumer remains uncertain and awaits clearer signs of a housing and economic recovery.”
Both the single-family and multifamily 55+ HMIs are diffusion indexes, derived from quarterly surveys of builders and developers in which they rank their perceptions of the current conditions and expectations for the new future as “good,” “fair,” or “poor.” The responses are used to create a scale of 0 to 100, with a rating of 50 generally indicating that the number of positive responses is about the same as the number of negative responses.
As the market continues to absorb the existing homes being sold by seniors, builders who specialize in this sector expect to see pent-up demand for the user-friendly homes that these buyers and renters want.
“Most 55+ home buyers are current owners with considerable equity in their homes, but they are waiting to sell their home before committing to another purchase. Historically low interest rates and good bargains in the new-and existing home markets will eventually bring these folks back into the market,” says Crowe. “Buying power has been scaled back by the financial crisis, but the demand for age-friendly housing is still there, and will be a big factor in housing for at least the next decade.”
Source: www.nahb.org