Eye On Housing
Builder confidence in the 55+ housing market remained solid in the second quarter with a single-family 55+ Housing Market Index (55+ HMI) reading of 71, down one point from the first quarter of 2019, according the National Association of Home Builders (NAHB) (Figure 1). The drop in the index from the first quarter was due to a slight softening in the traffic of prospective buyers.
NAHB produces two 55+HMIs, one measuring builder sentiment in the single-family market and in the 55+ multifamily condominium market. The 55+ HMIs are based on a survey that asks if current sales, anticipated six-month sales, and prospective buyer traffic is good, fair, or poor (high, average, or low for traffic).
A 55+ HMI reading at or above 50 indicates that more builders view market conditions as good than view them as poor. This quarter’s single-family reading of 71 is only one point down from the all-time high of 72 from the first quarter of 2019.
Among the components of the single-family 55+ HMI, present sales remained unchanged at 76 from the first quarter of 2019 while expected sales for the next six months rose one point to 78 and traffic of prospective buyers fell five points to 56.
The 55+ HMI multifamily condominium stood at 59 in the second quarter of 2019, up two points from the first quarter (Figure 2). Two of three index components posted increases from the previous quarter: present sales and expected sales for the next six months both increased three points to 61 and 65, respectively, while traffic of prospective buyers fell two points to 50.
In addition to producing 55+ HMI indices for the single-family and multifamily condo markets, NAHB also produces indices tracking supply and demand in the 55+ rental market. All four indices of the 55+ multifamily rental market increased in the second quarter: present production and future expected production both increased six points to 64, while present demand surged 12 points to 73 and future expected demand climbed 10 points to 73.
Demand for 55+ housing remains solid, as demonstrated by the surge in the 55+ HMIs for rental demand. The 55+ for-sale housing market also remains in positive territory due to favorable market conditions, such as demographics and low inventory in the existing homes market. However, ongoing supply-side forces such as high development costs are still impacting affordability and constraining the market.
For the full 55+ HMI tables, please visit nahb.org/55hmi.
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