Despite a 12-point drop from the previous quarter, builder confidence in the single-family 55+ housing market remains in positive territory for the first quarter of 2017 with a reading of 55, according to the National Association of Home Builders' (NAHB) 55+ Housing Market Index (HMI) released today. This is the 12th consecutive quarter with a reading above 50, which means that more builders view conditions as good than poor.
“Although builder sentiment in the 55+ housing sector is down from the previous quarter, overall confidence is still in positive territory and builders remain optimistic about the market,” said Dennis Cunningham, chairman of NAHB's 55+ Housing Industry Council and president of ActiveWest Builders in Coeur d’Alene, Idaho.
There are separate 55+ HMIs for two segments of the 55+ housing market: single-family homes and multifamily condominiums. Each 55+ HMI 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).
All three components of the 55+ single-family HMI posted decreases from the previous quarter: present sales dropped 12 points to 62, expected sales for the next six months decreased seven points to 68 and traffic of prospective buyers fell 15 points to 34.
The 55+ multifamily condo HMI remained even at 46, with the three components showing mixed results for the first quarter: present sales remained even at 50, expected sales for the next six months decreased five points to 47 and traffic of prospective buyers rose two points to 37.
All four indices tracking production and demand of 55+ multifamily rentals decreased in the first quarter: present production dipped four points to 50, expected future production dropped 16 points to 44, current demand for existing units decreased seven points to 64 and expected future production fell 14 points to 62.
“We saw an unusually high 55+ single-family HMI in the 4th quarter of 2016 due to a post-election surge in optimism. As this wears off, confidence is returning to a more sustainable level,” said NAHB Chief Economist Robert Dietz. “Although builders are struggling with shortages of labor and lots, as well as higher lumber prices, market conditions on balance remain favorable, and we expect solid growth in the 55+ housing sector.”
For the full 55+ HMI tables, please visit www.nahb.org/55hmi.