When it comes to housing the older than 55 crowd, the National Association of Home Builders’ most recent 55+ Housing Market Index (HMI) reveals builder confidence in the single-family home market remains strong, with a fourth-quarter 2018 reading of 66. This marks a six-point upswing over the third quarter.
“Like the broader housing market, the 55+ HMI is benefiting from the recent decline in mortgage rates,” said Robert Dietz, chief economist with the NAHB, in a statement. “Favorable demographics and solid homeowner wealth should continue to support demand for new 55+ housing.”
Measuring both the single-family home and multifamily condominium markets, the 55+ HMI gauges builder outlooks in a three-component survey asking whether current sales, prospective buyer traffic and anticipated six-month sales are poor, fair or good.
When compared to the prior quarter’s figures for the single-family home sector, all three index segments increased. Sales expected within the next six months went up five points to 70 in Q4 2018, and present sales saw a six-point increase to 72. The largest upswing was notched by the traffic of prospective buyers sales, with a 10-point surge to 53.
Over the same time period, the 55+ multifamily condominium HMI gained three points, coming in at 47. The index measuring present sales also climbed by three points to 51, and prospective buyer traffic went from 31 points in 2018’s third quarter to 38 in the fourth quarter, marking a seven-point improvement. One component of the multifamily condo index, expected sales for the next six months, saw a slight decline in confidence, slipping four points to 49.
The association also explored builder sentiment in the multifamily rental market, and in this sector, the fourth quarter 2018 results were more of a mixed bag, as only two of the four components of the 55+ multifamily rental market saw gains over the third quarter: Present production rose by six points to 60 and demand for existing units ticked up four points to 67. Both future expected demand and future expected production saw two-point falls, to 62 and 54, respectively.
“Overall, builders and developers in the 55+ housing market are reporting strong demand across the country,” Chuck Ellison, chairman of NAHB’s 55+ Housing Industry Council and vice president of McLean, Virginia-based Miller & Smith, said. “However, builders need to continue to manage rising construction costs to keep homes in 55+ communities at affordable price points.”