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Builder confidence remains positive in 55+ housing market

Shortage of residential lots, skilled labor remain challenge for builders, organization says

Builder confidence in the single-family 55+ housing market remained in positive territory for the first quarter of 2016.

The National Association of Home Builders' (NAHB) 55+ Housing Market Index (HMI), released this week, showed that despite the five-point dip from the previous quarter, this was the eighth consecutive quarter with a reading above its No. 50 favorable mark.

"Although builder sentiment in the 55+ housing sector is down slightly from its peak, overall confidence is still in positive territory," said Jim Chapman, chairman of NAHB's 55+ Housing Industry Council and president of Jim Chapman Homes LLC in Atlanta.

"Builders for the 55+ market are doing quite well in some areas across the country, while others are experiencing challenges that are hindering production," he added.

There are separate 55+ HMIs for two segments of the 55+ housing market: single-family homes and multifamily condominiums. Each 55+ 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). An index number above 50 indicates that more builders view conditions as good rather than poor.

Two of the three components of the 55+ single-family HMI posted decreases from the previous quarter: present sales decreased four points to 61 and traffic of prospective buyers dropped 14 points to 38. Meanwhile, expected sales for the next six months rose eight points to 71, which is the highest reading since the inception of the index in 2008.

The 55+ multifamily condo HMI rose six points to 48, with all three components showing increases as well: present sales rose five points to 49, expected sales for the next six months increased five points to 51 and traffic of prospective buyers jumped 8 points to 45.

Two of the four indices tracking production and demand of 55+ multifamily rentals increased in the second quarter: present production rose four points to 60 and current demand for existing units increased three points to 69. Expected future production fell eight points to 53 and future demand dipped three points to 68.

"Many builders in the 55+ housing sector are being cautious as they face various supply constraints," said NAHB Chief Economist Robert Dietz. "Lot availability and skilled labor shortages remain a challenge for builders in some parts of the country."

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