Sunday, November 06, 2016

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

by Bill McBride on 11/06/2016 10:45:00 AM

This is a quarterly index that was released last week 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: 55+ Housing Market Has Strong Third Quarter Showing

Builders report that the single-family 55+ housing market is holding strong in the third quarter, according to the National Association of Home Builders' (NAHB) 55+ Housing Market Index (HMI) released today. The index had a reading of 59, up two points from the previous quarter and the 10th consecutive quarter with a reading above 50.

“Builders and developers for the 55+ housing sector tell us that business is solid right now and they expect that trend to continue through the rest of the year,” said Jim Chapman, chairman of NAHB's 55+ Housing Industry Council and president of Jim Chapman Homes LLC in Atlanta.
...
“The 55+ housing market continues on a steady path toward recovery, much like the overall housing market,” said NAHB Chief Economist Robert Dietz. “Older home owners are able to take advantage of low mortgage rates and rising home prices, enabling them to sell their current homes 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 Q3 2016.  And reading above 50 indicates that more builders view conditions as good than as  poor.  The index increased to 59 in Q3 up from 57 in Q2.

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.