WASHINGTON, DC - Builder confidence in the 55+ housing market was markedly more upbeat in the first quarter of 2011 for apartment production and demand than for sales of single-family or condominium homes, according to a new survey released by the National Association of Home Builders (NAHB). The NAHB's expected demand index for 55+ multifamily rental units rose 10 points, to 44, from a year earlier, while the 55+ Housing Market Indices for single-family units and condos declined 2 and 3 points, down to 17 and 8, respectively.
Source: National Association of Home Builders
"Builders in the 55+ market are still finding that some customers are hesitant to buy," said Ken Simons, a New Jersey developer and chair of the NAHB 50+ Housing Council Board of Trustees. "Many prospective 55+ buyers are having trouble selling their existing homes, a problem often made worse by low appraisals."
The 55+ single-family HMI measures builder sentiment based on current sales, prospective buyer traffic and anticipated six-month sales for that market. A number greater than 50 indicates that more builders view conditions as good than poor. Among the index components, present sales dropped two points, to 15. Expected sales (six months into the future) dropped six points, to 24. And traffic of prospective buyers fell one point, to 17.
The 55+ multifamily condo HMI also showed weakness, with an index level of 8, down from 11 at the beginning of 2010. All three index components - current sales, expected sales and buyer traffic - declined during this period.
In contrast, indices of current and expected production of 55+ apartments gained 7 and 8 points, up to 20 and 27, respectively, in the first quarter of 2011. The index measuring current demand jumped 11 points, up to 39.
"The increased sense of optimism in the 55+ multifamily rental market is a welcome sign and consistent with other indicators of relative strength in rental housing markets," said NAHB's Chief Economist, David Crowe.
"Builder responses also indicate that demand for existing 55+ rental apartments is running ahead of production. A shortage may even emerge in that segment of the market, if pent-up demand emerges quickly but builders' inability to access credit continues," he said.
The 55+ Housing Market Index is a quarterly report issued by the NAHB Economics and Housing Policy Group that tracks expectations of present and projected demand based on sales, traffic and market conditions.
The National Association of Home Builders is a Washington-based trade association representing more than 160,000 members involved in home building, remodeling, multifamily construction, property management, subcontracting, design, housing finance, building product manufacturing and other aspects of residential and light commercial construction. NAHB is affiliated with 800 state and local home builders associations around the country. NAHB's builder members will construct about 80 percent of the new housing units projected for this year.