Thursday, August 07, 2014

NAHB: Builder Confidence improves for the 55+ Housing Market in Q2

by Calculated Risk on 8/07/2014 03:08:00 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, so the readings have been very low.  Note that this index is Not Seasonally Adjusted (NSA)

From the NAHB: Builder Confidence in the 55+ Housing Market Shows Positive Signs in the Second Quarter

Builder confidence in the single-family 55+ housing market for the second quarter is up year over year, according to the National Association of Home Builders’ (NAHB) 55+ Housing Market Index (HMI) released today. Compared to the second quarter of 2013, the single-family index increased three points to a level of 56, which is the highest second-quarter reading since the inception of the index in 2008 and the 11th consecutive quarter of year over year improvements.
...
Two of the components of the 55+ single-family HMI posted increases from a year ago: present sales climbed seven points to 61 and expected sales for the next six months rose one point to 61. Meanwhile, traffic of prospective buyers dropped six points to 42.
...
“One of the factors contributing to the positive signs in the 55+ housing market is the slow but steady increase in existing home sales in the last three months,” said NAHB Chief Economist David Crowe. “The 55+ market is strongly driven by consumers being able to sell their existing homes at a favorable price in order to buy or rent in a 55+ community.”
emphasis added
NAHB 55+ Click on graph for larger image.

This graph shows the NAHB 55+ HMI through Q2 2014.  The index increased in Q2 to 56 from 50 in Q1, and up from 53 in Q2 2013.  This indicates that more builders view conditions as good than as  poor.

There are two key drivers: 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.