55+ Builder Confidence is Highest Yet : Industry News and Updates
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55+ Builder Confidence is Highest Yet

by HBA of North Georgia on 02/06/17

Builder confidence in the single-family 55+ housing market remained strong in the fourth quarter of 2016 with a reading of 67, up eight points from the previous quarter, according to the NAHB 55+ Housing Market Index (HMI), released today. This is the highest reading since the inception of the index in 2008.

“The significant increase is partly attributed to a post-election boost, as many builders and developers are encouraged by President Trump’s commitment to cut burdensome regulations that negatively impact small businesses,” said Dennis Cunningham, chairman of NAHB’s 55+ Housing Industry Council and president of ActiveWest Builders in Coeur d’Alene, Idaho.

“Builders and developers in this market segment are also encouraged by the fact that for the next 15 years, 10,000 baby boomers will be turning 65 every day,” Cunningham continued. “The consistent pressure of this age group wanting to downsize, shifting to other regions of the country or just simply looking for a newer home or community also plays a key role in the index movement.”

There are separate 55+ HMIs for 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). An index number above 50 indicates that more builders view conditions as good than poor.

All three index components of the 55+ single-family HMI posted increases from the previous quarter: Present sales and expected sales for the next six months posted index-highs, increasing 11 points to 74 and 10 points to 75, respectively, while traffic of prospective buyers rose two points to 49.

The 55+ multifamily condo HMI decreased two points to 46. The index component for present sales fell one point to 50, expected sales for the next six months increased one point to 52 and traffic of prospective buyers dropped three points to 35.

All the four indices tracking production and demand of 55+ multifamily rentals increased in the fourth quarter. Present production rose six points to 54, expected future production increased 11 points to 60, and current demand for existing units and future demand posted index-highs, jumping 12 points to 71 and 17 points to 76, respectively.

“The strong performance of the 55+ HMI at the end of 2016 is consistent with recent increases in broader measures of the housing market, including new home sales and the NAHB/Wells Fargo HMI,” said NAHB Chief Economist Robert Dietz. “We expect continued growth in the 55+ market in 2017, although builders in many places will still face challenges in finding adequate supplies of inputs like labor and lots.”

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