Builder confidence in the single-family 55+ housing market dropped five points to 66 in the first quarter of 2018, according to the National Association of Home Builders’ (NAHB) 55+ Housing Market Index (HMI). The decline came off of an all-time high reading of 71 from the fourth quarter of 2017.
“Builders and developers for the 55+ housing sector continue to report strong demand,” said Chuck Ellison, chairman of NAHB’s 55+ Housing Industry Council and Vice President-Land of Miller & Smith in McLean, Va. “However, there are many places around the country facing labor and lot shortages, along with increased building materials costs, which are affecting production.”
There are separate 55+ HMIs for two segments of the 55+ housing market: single-family homes and multifamily condominiums. Each 55+ HMI measures builder sentiment based on a survey that asks if current sales, prospective buyer traffic and anticipated six-month sales for that market are good, fair or poor (high, average or low for traffic).
When compared to the previous quarter, among the three single-family components of the 55+ HMI, present sales fell nine points to 70, expected sales for the next six months rose seven points to 80 and traffic of prospective buyers stayed even at 51.
Meanwhile, the 55+ multifamily condo HMI increased 10 points to 64, which is the highest reading since the inception of the index in 2008. All three components posted record highs as well: Present sales rose eight points to 67, expected sales for the next six months increased 10 points to 70 and traffic of prospective buyers jumped 15 points to 55.
Three of the four components of the 55+ multifamily rental market went down from the previous quarter: Present production declined three points to 59, expected future production fell four points to 57 and present demand for existing units decreased three points to 68, while future expected demand edged up one point to 68.
“The decline in the 55+ single-family HMI is consistent with slight softening of other measures of single-family construction seen recently, likely due to winter weather effects, which may be affecting housing activity in some areas of the country,” said NAHB Chief Economist Robert Dietz. “However, market conditions overall remain favorable, and we expect gradual continued growth in the 55+ housing sector.”