Thursday, November 06, 2014

NAHB: Builder Confidence improves for the 55+ Housing Market in Q3

by Bill McBride on 11/06/2014 02:55:00 PM

This is a quarterly index from the the National Association of Home Builders (NAHB) and is similar to the overall housing market index (HMI). The NAHB started this index in Q4 2008 (during the housing bust), so the readings were initially very low.  Note that this index is Not Seasonally Adjusted (NSA)

From the NAHB: Builders Gain Confidence in the 55+ Housing Market

Builder confidence in the 55+ housing market was up again in the third quarter, according to the latest release of NAHB’s 55+ Housing Market Index (55+HMI). The 55+ HMI release contains separate indices for single-family homes and multifamily condominiums. Each is a weighted average of three components: present sales, expected sales, and traffic. The numbers are not seasonally adjusted, so they should only be compared year over year. On that basis, both were up in the third quarter.

The single-family 55+ HMI jumped nine points from the third quarter of 2013, to 59—the highest third-quarter reading since the inception of the index in 2008 and the 12th consecutive quarter of year over year improvements. All three components posted year-over-year increases: present sales jumped 13 points to 65, expected sales for the next six months climbed 10 points to 63 and traffic of prospective buyers rose three points to 46.
emphasis added
NAHB 55+ Click on graph for larger image.

This graph shows the NAHB 55+ HMI through Q3 2014.  The index increased in Q3 to 59 from 56 in Q2, and up from 50 in Q3 2013.  This indicates that more builders view conditions as good than as  poor.

There are two key drivers in addition to the improved economy: 1) there is a large cohort moving into the 55+ group, and 2) the homeownership rate typically increases for people in the 55 to 70 year old age group. So demographics should be favorable for the 55+ market.