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Builder Confidence in 55+ Housing Market Keeps Improving

Builder Confidence in 55+ Housing Market Keeps Improving
Pictured: My son, Kyle.

Today is Veterans day, and as such, Archival Designs would like to thank all veterans for their service.

Veterans Day is an official United States holiday honoring armed service veterans. It is a federal holiday that is observed on November 11th. It coincides with other holidays such as Armistice Day and Remembrance Day, which are celebrated in other parts of the world and also mark the anniversary of the end of World War I. (Major hostilities of World War I were formally ended at the 11th hour of the 11th day of the 11th month of 1918, with the German signing of the Armistice.) Veterans Day is not to be confused with Memorial Day; Veterans Day celebrates the service of all U.S. military veterans, while Memorial Day is a day of remembering the men and women who died while serving.


Builder confidence in the 55+ housing market for single-family homes and other segments showed significant improvement in this year's third quarter compared to the same period last year, according to NAHB's latest 55+ Housing Market Index (HMI) released on Nov. 8. Here's a snapshot of how the confidence gauge read for the three different market segments it measures:

55+ Single-Family Homes

The index pertaining to single-family homes in the 55+ market more than tripled year over year from a level of 12 to 36. The component measuring present sales conditions was up 25 points from this time last year, to 36, while the component measuring expected sales for the next six months was up 27 points to 42 and the component measuring traffic of prospective buyers was up 20 points to 33.

55+ Multifamily/Condos

While condos remain the weakest segment of the 55+ housing market, the 55+ multifamily condo HMI gained a solid 13 points to 23 in the latest reading, which is the highest it has been in any third quarter since the index was started in 2008,  All 55+ multifamily HMI components increased considerably compared to a year ago as present sales rose 13 points to 22, expected sales for the next six months jumped 19 points to 29 and traffic of prospective buyers climbed 11 points to 22.

55+ Multifamily/Rentals

The 55+ multifamily rental indices, which already recovered substantially last year, showed continued but more modest increases in the third quarter, with the measure for present production climbing six points to 31, expectations for future production up nine points to 35 and current demand for existing units and expected future demand up two points each to 42 and 44, respectively.

Latest Data Show 125 Improving Housing Markets in November

The number of U.S. housing markets showing consistent improvement in three key measures of strength expanded by 22 in November to a total of 125, according to the NAHB/First American Improving Markets Index (IMI), released today. This marks a third consecutive monthly gain for the index, which now includes representatives from across 38 states as well as the District of Columbia. Newly added markets include such geographically diverse locations as San Diego, Calif.; Gainesville, Ga.; Omaha, Neb.; Louisville, Ky.; and Charlotte, N.C.

Commenting on the latest IMI reading, NAHB Chief Economist David Crowe said, “The solid increase in the number of improving housing markets this month illustrates the degree to which the housing recovery has gained momentum since we initiated the IMI last year. Compared to the 30 markets that made the list as of November 2011, we now have 125, which is about one-third of all the markets surveyed for this index.” 

The IMI measures three sets of independent monthly data to get a mark on the top improving markets -- including employment growth from the Bureau of Labor Statistics, house price appreciation from Freddie Mac and single-family housing permit growth from the U.S. Census Bureau. A metropolitan area must see improvement in all three measures for at least six consecutive months following those measures’ respective troughs before being included on the improving markets list.

Mortgage Lending Standards Barely Easing as Consumer Demand Rises

In a recent Eye on Housing blog entry, NAHB's economists take a good look at results from the Federal Reserve Board’s October 2012 Senior Loan Officer Opinion Survey, which indicate that a small fraction of banks eased their lending standards for business and consumer loans in the previous three months. In all, just 4.7% of respondents indicated that they had eased their lending standards, compared to 3.1% of banks that reported having tightened them.

Meanwhile, the vast majority of firms -- 92.2% -- kept their lending standards basically the same. Yet, while lending standards have remained relatively unchanged since the second quarter of 2010, bank respondents have indicated that demand for prime residential mortgages has been rising, on net. And in fact, the share of banks reporting stronger demand for residential mortgages continues to exceed the percentage of banks experiencing weaker demand by a wide margin. Our economists point out that, while requirements for mortgage lending don't seem to be easing much even as demand improves, the opposite is true for other consumer loan products such as credit cards and automobile loans, which are getting easier to come by as more consumers apply for them.

Our economists therefore note that sticky lending standards in the residential mortgage market are likely contributing to a shortage of prime residential mortgages and slowing recovery in the housing market.

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  • Joanne Loftus
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