Builder confidence in the single-family 55+ housing market continued to strengthen in the first quarter of 2019 with a reading of 72, up six points from the previous quarter, 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).
“Overall, demand for homes in 55+ communities remain strong as more buyers and renters in that market search for simpler living arrangements,” said Karen Schroeder, chair of NAHB’s 55+ Housing Industry Council and vice president of Mayberry Homes in East Lansing, Mich. “However, there are still headwinds that are impacting the market, such as rising construction costs and a lack of skilled labor.”
All three index components of the 55+ single-family HMI posted increases from the previous quarter: Present sales rose four points to 76, expected sales for the next six months increased seven points to 77 and traffic of prospective buyers climbed eight points to 61.
The 55+ multifamily condo HMI posted a gain of 10 points to 57. All three index components posted increases from the previous quarter: Present sales increased seven points to 58, expected sales for the next six months rose 13 points to 62 and traffic of prospective buyers jumped 14 points to 52.
Two of the four components of the 55+ multifamily rental market went up from the fourth quarter: Future expected production increased four points to 58 and future expected demand inched up one point to 63. Present production dropped two points to 58 and present demand for existing units fell six points to 61.
“Favorable demographics and recent declines in mortgage rates have helped support demand for 55+ housing,” said NAHB Chief Economist Robert Dietz. “We expect continued growth in the 55+ housing market, provided builders are able to manage the challenges of regulatory, land acquisition and construction costs.”