Builder confidence in the 55+ housing market was up again in the third quarter, according to the latest release of NAHB’s 55+ Housing Market Index (55+HMI). The 55+ HMI release contains separate indices for single-family homes and multifamily condominiums. Each is a weighted average of three components: present sales, expected sales, and traffic. The numbers are not seasonally adjusted, so they should only be compared year over year. On that basis, both were up in the third quarter.
The single-family 55+HMI jumped nine points from the third quarter of 2013, to 59—the highest third-quarter reading since the inception of the index in 2008 and the 12th consecutive quarter of year over year improvements. All three components posted year-over-year increases: present sales jumped 13 points to 65, expected sales for the next six months climbed 10 points to 63 and traffic of prospective buyers rose three points to 46.
Meanwhile, the 55+HMI for multifamily condos posted a four-point gain to 41, which is also the highest third-quarter reading since the inception of the index. Again, all components were up year-over-year: present sales rose five points to 42, expected sales for the next six months climbed three points to 43 and traffic of prospective buyers increased three points to 38.
The 55+HMIs are based on a survey of NAHB members active in the 55+ segment of the industry. For each type of housing, the members are asked if current sales, prospective buyer traffic and anticipated six-month sales are good, fair or poor (high, average or low for traffic). The answers are converted to an index on a scale of 0 to 100, where a number above 50 means more builders view conditions as good than poor.
One factor helping explain the continued strength in the 55+ housing market is the slow but consistent rise in home equity, releasing some of the pent-up demand from older households who had been sidelined due to their inability to sell their existing homes at an acceptable price.
For more detail, including the complete history of every 55+HMI component, visit www.nahb.org/55hmi .