U.S. Builder Confidence at Record High for 55+ Housing Market

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The National Association of Home Builders' (NAHB) latest 55+ Housing Market Index (HMI) for the fourth quarter of 2014 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.

"Over the past several years we have seen demand for 55+ housing explode," said Timothy McCarthy, chairman of NAHB's 50+ Housing Council and managing partner of Traditions of America in Radnor, Pa. "While this growth in sales is welcome, many builders are challenged to ramp up home production to fill new home orders."

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). An index number below 50 indicates that more builders view conditions as poor than good.

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 55+ multifamily condo HMI posted a five-point gain to a reading of 40, which is also the highest fourth-quarter reading since the inception of the index. All components of the index increased for the fourth quarter: present sales rose five points to 42, expected sales for the next six months climbed five points to 45 and traffic of prospective buyers increased three points to 33.

The indices tracking production and demand of 55+ multifamily rentals posted record year over year readings in the fourth quarter. Present production rose five points to 48, expected future production increased five points to 51, current demand for existing units climbed 10 points to 64 and future demand jumped 11 points to 66.

"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."