The single-family 55+ Housing Market Index (55+ HMI) dropped seven points to 60 in the third quarter of 2018, according to the National Association of Home Builders (NAHB). Although the index declined, it is still above the index break even point of 50, which means that more builders view conditions as good than poor (Figure 1).
NAHB produces two 55+ HMIs: one for the single-family market and another measuring builder confidence in the multifamily condominium market. 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).
All three components of the single-family 55+ HMI dropped in the third quarter: present sales slipped 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 multifamily condominium 55+ HMI also declined in the third quarter, dropping 13 points to 44 (Figure 2). Among its components, present sales and traffic of perspective buyers both fell by 13 points to 48 and 31, respectively, and sales expected in the next six months slipped 10 points to 53.
In addition to the 55+ for-sale market, NAHB also tracks demand and supply in the multifamily rental market. All measures fell 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.
Recent declines in the 55+ HMIs are in line with recent weakness in new and existing home sales. Higher construction costs and rising interest rates are negatively impacting housing affordability, and consequently pricing more consumers out of the market.
For the full 55+ HMI tables, please visit www.nahb.org/55hmi.