Thursday, August 04, 2016

NAHB: Builder Confidence "Remains in Positive Territory" for 55+ Housing Market in Q2

by Bill McBride on 8/04/2016 03:25:00 PM

This is a quarterly index that was released yesterday by the the National Association of Home Builders (NAHB). This index 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

From the NAHB: Second Quarter Results Show 55+ Housing Market Remains in Positive Territory

Builder confidence in the single-family 55+ housing market remains in positive territory in the second quarter with a reading of 57, up one point from the previous quarter, according to the National Association of Home Builders' (NAHB) 55+ Housing Market Index (HMI) released today. This is the ninth consecutive quarter with a reading above 50.

“Builders and developers for the 55+ housing sector continue to report steady demand,” said Jim Chapman, chairman of NAHB's 55+ Housing Industry Council and president of Jim Chapman Homes LLC in Atlanta. “However, there are many places around the country facing labor and lot shortages, which are hindering production.”
...
“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.”
emphasis added
NAHB 55+ Click on graph for larger image.

This graph shows the NAHB 55+ Single Family HMI through Q2 2016.  Any reading above 50 indicates that more builders view conditions as good than as poor.  The index increased to 57 in Q2 up from 56 in Q1.

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