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Optimistic Outlook For 55+ Single-Family Market
Confidence Growing in Multi-Family Segment

The National Association of Homebuilders said its second-quarter 55+ Single-Family Housing Market Index remains above its benchmark level of 50. And its 55+ Multi-Family Condo Housing Market Index is steadily climbing, although it is below 50.

For the fifth consecutive quarter, builders of single-family homes in the 55+ housing market are optimistic about the current state of this industry segment, as well as its prospects looking ahead.

Builder confidence in the multi-family condo market appears to be generating momentum as well.

The National Association of Homebuilders conducts a quarterly 55+ housing survey and asks member-builders questions about current sales, prospective buyer traffic and anticipated six-month sales.

The 55+ Single-Family Housing Market Index for the second quarter stands at 57. And while it scored a 58 in the first quarter of 2015, for a drop of one point, this index has remained above the benchmark level of 50 since the second quarter of 2014.

An index number above 50 indicates that more builders view conditions as being positive. Any score below 50 means the opposite.

"Although builder confidence in the 55+ housing sector is down slightly from its peak, builders are still optimistic about the market going forward," Timothy McCarthy, chairman of the NAHB's 55+ Housing Industry Council, said.

In 2014, the Single-Family Index was at 47 in the first quarter; jumped to 54 in the second quarter; dropped slightly to 50 in the third quarter; and then climbed three points to 53 in the fourth quarter.

At the same time, the NAHB also maintains an index for the multi-family segment. The 55+ Multi-Family Condo Index jumped five points, from 38 in the first quarter to 43 in the second.

"According to our survey, one area in particular that's improved recently is the condo market, and we expect this momentum to continue," McCarthy said.

In 2014, the Multi-Family Condo Index was at 39 in the first quarter; dropped to 38 in the second; jumped to 41 in the third; and then improved again to 42 in the fourth quarter.

"Overall, builders in the 55+ housing sector remain positive about the market," said David Crowe, the NAHB's chief economist. "However, many builders are being cautious as lot availability and skilled labor shortages remain a challenge in some parts of the country."

Two of the three components of the 55+ Single-Family HMI decreased slightly from the previous quarter: Current sales dropped two points to 62; expected sales for the next six months decreased one point to 66; but traffic of prospective buyers climbed three points to 43. Its composite score is 57.

All three components of the 55+ Multi-Family Condo HMI rose: Present sales climbed three points to 44; expected sales for the next six months jumped 10 points to 49; and traffic of prospective buyers increased eight points to 41. Its composite score is 43.

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Fixed-rate mortgages have begun to move higher, and a Freddie Mac official said there could be "continued interest rate tension" heading into the fall.

For the week ending Aug. 14, the 30-year fixed-rate mortgage averaged 3.94 percent, compared to 3.91 one week earlier. Last year at this time, 30-year rates averaged 4.12 percent.

Freddie Mac said 15-year fixed-rate mortgages averaged 3.17 percent, compared to a 3.13 percent average for the week ending Aug. 7. A year ago, 15-year rates averaged 3.24 percent.

Five-year hybrid adjustable-rate mortgages averaged 2.93 percent, and dropped from 2.95 percent. A year ago, 5-year ARMs averaged 2.97 percent.

And one-year ARMs averaged 2.62 percent, rising from the 2.54 percent average. A year ago, one-year ARMs averaged 2.36 percent.

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September 20, 2019, 4:22 pm PDT

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