Home Builders' Confidence Drops for Active Adult Communities in Q-2

Home Builders' Confidence Drops for Active Adult Communities in Q-2

Residential News » Residential Real Estate Edition | By Michael Gerrity | August 12, 2010 11:58 AM ET

According to new data from the National Association of Home Builders' (NAHB) 55+ Housing Market Index  (55+ HMI) - a quarterly survey of the association's builder members engaged in the production of mature-market housing, builder confidence in the mature-housing market retreated during this year's second quarter. This past quarter's index values dropped for all areas surveyed, compared to the previous year's second quarter.

"The same factors that affect activity in the overall housing market - including hesitant home buyers, tight consumer credit, and continuing competition from foreclosed and distressed properties - are having an impact on the 55+ segment of the market, which remains stalled in most regions," says NAHB's Chief Economist, David Crowe. "In spite of the recent flurry of home-buying activity tied to the home buyer tax credit, many older homeowners continue to have difficulty selling their existing homes, causing them to postpone plans to look for a home that offers reduced maintenance or is otherwise more appropriately designed to accommodate their current lifestyles."

The 55+ single-family HMI measures builder sentiment based on current sales, prospective buyer traffic and anticipated six-month sales for the 55+ single-family market.  A number greater than 50 indicates that more builders view conditions as good than poor. In the second quarter of 2010, the index slipped four points compared to the same period a year earlier, down to 12.  Present sales fell to 12, down four points; expected sales to 17, down seven points, and traffic to 12, down 2 points.

The 55+ multifamily condo index continued to record the lowest values, with a drop of five points over the previous year's second quarter, to a record low value of 7, reflecting drops in current sales, expected sales, and traffic from prospective buyers.

Current and expected demand indices for the 55+ multifamily rental sector, at 31 and 30, respectively, are much healthier than those for current and expected production, at 15 and 16, respectively.  These statistics indicate that more respondents see some strength.

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