Eye On Housing
Builder confidence in the 55+ housing market remained in positive territory in the third quarter of 2017, with a single-family 55+ housing market index reading (55+ HMI) of 59 (Figure 1). The index dropped seven points this quarter, but it is the 14th consecutive quarter in which it has been above 50, the break-even point at which more respondents view conditions as good than poor.
There are separate 55+ HMIs for two segments of the 55+ housing market: single-family homes and multifamily condominiums. Each 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).
Among the components of the single-family 55+ HMI, present sales dropped from 70 to 65, sales expected in the next six months slipped from 80 to 63 and traffic of prospective buyers decreased from 53 to 44 in the third quarter.
Meanwhile, the 55+ multifamily condo HMI fell slightly from 53 to 51 in the third quarter (Figure 2). Of its three components, present sales edged down from 56 to 55, sales expected in the next six months remained unchanged at 55 and traffic of prospective buyers dipped from 45 to 40.
In addition to the 55+ HMIs, supply and demand measures for the 55+ multifamily rental market are produced. In the third quarter of 2017, all four components increased: present production from 53 to 59, production expected in next six months from 52 to 57, present demand for existing units from 66 to 75 and demand expected in next six months from 67 to 76.
The declines in the 55+ single-family and multifamily condominium indices may reflect disruptions caused by the destructive hurricanes and wildfires that occurred earlier in the fall, as well as ongoing issues with the supply of labor, lots and some building materials. Despite these challenges, the 55+ housing market is expected to be strong going forward due to favorable market conditions.
For the full 55+ HMI tables, please visit nahb.org/55hmi.
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