Builder Confidence Surges in May

by Peter Ricci

Builder confidence for both the general housing market and the 55+ market increased in May on the strength of homebuyer urgency.

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Builder confidence at all levels of the homebuilding industry showed some of its strongest numbers in years in May, with both the Housing Market Index and the 55+ single-family Housing Market Index increasing.

The indices, both of which are measured and released by the National Association of Home Builders (NAHB), reflected new levels of homebuilder optimism and greater interest from homebuyers.

Homebuyer Urgency in the Housing Market Index

For the more general Housing Market Index, builder confidence for newly built, single-family homes rose three points to 44, with all three main components of the index showing improvement as well.

The index gauging current sales conditions increased four points to 48, while the index gauging expectations for future sales edged up a single point to 53, which is its highest level since February of 2007. Finally, the index gauging traffic of prospective buyers gained three points to 33.

Rick Judson, the chairman of the NAHB, said that low housing inventory has inspired a new level of urgency for potential homebuyers.

“Builders are noting an increased sense of urgency among potential buyers as a result of thinning inventories of homes for sale, continuing affordable mortgage rates and strengthening local economies,” Judson said. “This is definitely an encouraging sign even amidst rising challenges with regard to the cost and availability of building materials, lots and labor.”

Soaring Confidence in 55+ Market

As promising as the Housing Market Index was, though, it paled in comparison to the gains seen from the 55+ single-family Housing Market Index, which increased 19 points in the first quarter to reach 46; that’s the highest reading since the NAHB launched the index in 2008, and the sixth straight quarter of increases.

With numerous Baby Boomers retiring and seeking new housing options, the 55+ market will be an important one for the housing market, and the individual components of NAHB’s measure of the market left much to smile about: the present sales marker rose 19 points to 46; expected sales rose 21 points to 53; and traffic of prospective buyers rose 15 points to 41.

Also, the 55+ Housing Market Index for condos showed strong numbers. Overall, the index rose 23 points to 38, its highest first-quarter reading in the index’s history, while present sales rose 23 points to 37, expected sales for the next six months climbed 23 points to 43 and traffic of prospective buyers rose 23 points to 38.

“We are seeing an increase in consumer demand for homes and communities that are designed to address the specific needs of the mature homebuyer,” said Robert Karen, chairman of NAHB’s 50+ Housing Council and managing member of the Symphony Development Group.

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