Builder confidence in the single-family 55+ housing market rose one point in the third quarter of 2019, returning to its record-high reading of 72, according to the National Association of Home Builders‘ (NAHB) 55+ Housing Market Index (HMI). This is the highest reading since the inception of the index in 2008.
The 55+ HMI measures two segments of the 55+ housing market: single-family homes and multifamily condominiums. Each segment of the 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).
“The 55+ market has been supported by strong demand as aging Baby Boomers continue to seek downsized homes, but with higher end features and amenities,” said Karen Schroeder, chair of NAHB’s 55+ Housing Industry Council and vice president of Mayberry Homes in East Lansing, Mich. “While conditions remain positive, headwinds such as labor shortages and rising construction costs are still dampening the market a bit.”
For the three index components of the 55+ single-family HMI, present sales rose two points to 78, expected sales for the next six months dropped one point to 77 and traffic of prospective buyers fell one point to 55.
The 55+ multifamily condo HMI decreased six points to 53. All three index components posted declines from the previous quarter: Present sales fell five points to 56, expected sales for the next six months dropped nine points to 56 and traffic of prospective buyers declined three points to 47.
Three of the four components of the 55+ multifamily rental market dropped in the third quarter: Present production dropped seven points to 57, future expected production fell nine points to 55 and present demand for existing units fell one point to 72. Future demand however, rose one point to 74.
“Demand for 55+ single-family housing remains strong, mirroring the gains we have seen in the overall market, which has been largely supported by low interest rates and healthy job growth,” said NAHB Chief Economist Robert Dietz. “Sentiment about the 55+ multifamily market declined somewhat this quarter, but on balance remains positive. A modest decline was not surprising, given the post-Great recession record number of apartments currently under construction.”