Thursday, February 05, 2015

NAHB: Builder Confidence improves Year-over-year for the 55+ Housing Market in Q4

by Bill McBride on 2/05/2015 02:20:00 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) and usually dips in Q4 compared to Q3 (just seasonal).

From the NAHB: Builder Confidence in the 55+ Housing Market Ends Fourth Quarter on a Record High

The fourth quarter results of the National Association of Home Builders’ (NAHB) latest 55+ Housing Market Index (HMI) released today show that builders are feeling quite positive about the market. All segments of the market—single-family homes, condominiums and multifamily rental—registered increases compared to the same quarter a year ago. The single-family index increased six points to a level of 54, which is the highest fourth-quarter reading since the inception of the index in 2008 and the 13th consecutive quarter of year over year improvements.
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All components of the 55+ single-family HMI posted increases from a year ago: present sales increased five points to 58, expected sales for the next six months rose two points to 64 and traffic of prospective buyers increased six points to 39.

“The strength of the 55+ segment of the housing industry has been fueled in part by rising home values,” said NAHB Chief Economist David Crowe. “Older home owners are finding it easier to sell their existing homes at a favorable price, allowing them to rent or buy a new home in a 55+ community.”
emphasis added
NAHB 55+ Click on graph for larger image.

This graph shows the NAHB 55+ HMI through Q4 2014.  The index increased in Q4 to 54 from 48 in Q4 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.