Builder and developer confidence in the 55+ housing market strengthened in the third quarter of 2019, as reflected by the single-family 55+ housing market index (55+ HMI) reading of 72, up one point from the previous quarter (Figure 1). This is the highest reading since the inception of the index in 2008.
NAHB produces two 55+HMIs, measuring sentiment in both the single-family and multifamily condominium markets. Each segment of the 55+ HMI is based on a survey that asks builders and developers 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 55+ single-family HMI, present sales rose two points to 78, while expected sales for the next six months dropped one point to 77 and traffic of prospective buyers fell one point to 55.
The strong 55+ single-family HMI reflects gains seen in the overall housing market, which has been largely supported by low interest rates and healthy job growth.
Meanwhile, the multifamily condo 55+ HMI decreased six points to 53 in the third quarter of 2019 (Figure 2). All three index components posted declines from the previous quarter: Present sales fell five points to 56, expected sales for the next six months dropped nine points to 56 and traffic of prospective buyers declined three points to 47.
In addition to the two 55+HMIs for the single-family and condo markets, NAHB produces four indices measuring supply and demand in the 55+ multifamily rental markets. Three of the four indices dropped in the third quarter: present production dropped seven points to 57, future expected production fell nine points to 55, and present demand for existing units fell one point to 72. Meanwhile, future demand in the 55+ multifamily rose one point to 74.
Despite the declines, all multifamily 55+ indices remain above 50, indicating that more respondents say conditions are good than poor. Some decline in sentiment about the 55+ multifamily market is not surprising, given the post-Great recession record number of apartments currently under construction.
For the full 55+ HMI tables, please visit nahb.org/55hmi.