Once again, builder confidence in the 55+ housing market showed significant improvement, according to NAHB’s 55+ Housing Market Indices (55+ HMIs) for the third quarter of 2012. The 55+ HMIs and their components are based on survey questions that ask builders if market conditions are good, fair, or poor (high/very high, about average, or low/very low for the questions on traffic). The indices all lie on a scale of 0 to 100, where 50 is a break-even point that occurs when equal numbers of builders report good and bad conditions.
There are separate 55+ HMIs for three segments of the 55+ housing market: single-family homes, multifamily condominiums and rental apartments. In the third quarter, the 55+ HMI for single-family housing tripled year over year from a level of 12 to 36, which is the highest third-quarter reading since the inception of the index in 2008. (Because the 55+ HMIs are not seasonally adjusted, they need to be compared year over year.)
Although multifamily condos remain the weakest part of the 55+ HMI, builder confidence improved there as well. The 55+ HMI for condos had a significant increase of 13 points to 23, which is the highest third-quarter reading since the inception of the index in 2008.
Meanwhile, the 55+ multifamily rental indices, which already recovered substantially last year, showed continued but more modest increases in the third quarter. For example, present production climbed six points to 31.
Like other segments of the housing market, the market for 55+ housing is improving steadily as conditions get better in some parts of the country. Although all 55+ HMIs are improving, all still remain below the break-even point of 50, indicating that there are still many places where builders consider the market for 55+ housing to be only fair to poor. So, at the national level, there is considerable room for further improvement, assuming that the housing recovery can expand into other parts of the country.
For more information about NAHB’s 55+ HMI survey see www.nahb.org/55HMI