The National Association of Home Builders’ (NAHB) single-family 55+ Housing Market Index (55+ HMI) dropped 12 points to 55 in the first quarter of 2017, after an unusually high index reading of 67 in the fourth quarter of 2016. Despite the drop, the 55+ HMI still remains above 50, which means that more builders view conditions as good than poor (Figure 1).
NAHB produces two separate 55+ HMIs: one gauging builder sentiment in the single-family market and another for the multifamily condominium market. Each 55+ HMI is 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).
All three components of the single-family 55+ HMI posted decreases from the previous quarter: present sales dropped 12 points to 62, expected sales for the next six months decreased seven points to 68 and traffic of prospective buyers fell 15 points to 34.
The multifamily condo 55+ HMI remained unchanged at 46 from the previous quarter, with its three components showing mixed results: present sales remained even at 50, while expected sales for the next six months decreased five points to 47 and traffic of prospective buyers rose two points to 37 (Figure 2).
In addition to the for-sale market, NAHB also tracks activity in the 55+ rental market. All four indices tracking production and demand rentals decreased in the first quarter: present production dipped four points to 50, expected future production dropped 16 points to 44, current demand for existing units decreased seven points to 64 and expected future production fell 14 points to 62.
The drop in the 55+ single-family HMI reflects confidence returning to a more sustainable level after the post-election surge in optimism in the fourth quarter of 2016. For the full 55+ HMI tables, please visit www.nahb.org/55hmi.