While demand continues to be strong in the single-family 55+ housing market, production isn't as robust as it could be.
According to the National Association of Home Builders' (NAHB) 55+ Housing Market Index (HMI), builder confidence in the market was up a point to57 in the second quarter. That's the ninth consecutive quarter with a reading above 50. An index number above 50 indicates that more builders view conditions as good than poor.
“Builders and developers for the 55+ housing sector continue to report steady demand,” said Jim Chapman, chairman of NAHB's 55+ Housing Industry Council. “However, there are many places around the country facing labor and lot shortages, which are hindering production.”
A closer look
There are separate 55+ HMIs for two segments of the 55+ housing market: single-family homes and multifamily condominiums. Each 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).
One of the three index components of the 55+ single-family HMI -- traffic of prospective buyers -- increased four points to 42. Present sales held steady at 61, while expected sales for the next six months dropped two points to 69.
The 55+ multifamily condo HMI dipped one point to 47. The index component for expected sales for the next six months rose three points to 54, while present sales remained even at 49. Traffic of prospective buyers fell seven points to 38.
Three of the four indexes tracking production and demand of 55+ multifamily rentals decreased in the fourth quarter. Present production fell nine points to 51 -- from a record-high reading in the previous quarter -- while current and future demand for existing units both dipped one point to 68 and 67, respectively; expected future production rose three points to 56.
“Much like the overall housing market, this quarter’s 55+ HMI results show that this segment continues its gradual, steady recovery,” said NAHB Chief Economist Robert Dietz. “A solid labor market, combined with historically low mortgage rates, are enabling 55+ consumers to be able to sell their homes at a favorable price and buy or rent a home in a 55+ community.”