Builder confidence in the single-family 55+ housing market dropped seven points to 60 in the third quarter, according to the recently released National Association of Home Builders’ (NAHB) 55+ Housing Market Index (HMI). Although the index declined, it is still in positive territory as a reading above 50 means that more builders view conditions as good than poor.
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).
“Although various headwinds are starting to have an impact on the 55+ housing market, there are many parts of the country where the market is still doing well,” said Chuck Ellison, chairman of NAHB’s 55+ Housing Industry Council and Vice President-Land of Miller & Smith in McLean, Virginia. “In some places it is becoming a challenge for builders to provide housing at prices their customers can afford.”
When compared to the previous quarter, all three single-family components of the 55+ HMI saw a decline: present sales dropped seven points to 66, sales expected in the next six months fell 12 points to 65 and traffic of prospective buyers dipped four points to 43.
The 55+ multifamily condo HMI dropped 13 points to 44. All three 55+ condo HMI components decreased as well in the third quarter: present sales and traffic of perspective buyers both fell 13 points to 48 and 31, respectively, and sales expected in the next six months dropped 10 points to 53.
All four components of the 55+ multifamily rental market went down in the third quarter: present production and demand expected in the next six months both fell 11 points to 54 and 64, respectively, production expected in the next six months dropped 12 points to 56 and present demand for existing units edged down nine points to 63.
“The decline in the single-family 55+ HMI is consistent with the recent weakness in new and existing home sales,” said NAHB Chief Economist Robert Dietz. “The high readings seen in the previous three quarters are not sustainable with high construction costs and rising interest rates.”