The appeal of new homes to baby boomers and older buyers hasn't gone unnoticed by builders.
To be sure, builder confidence in the single-family housing market for borrowers older than 55 remained strong in the fourth quarter of 2018 with a reading of 66, up six points compared to the third quarter, according to the National Association of Home Builders' 55+ Housing Market Index.
The index measures two segments of the market: Single-family homes and multifamily condominiums. Each segment was designed to capture 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).
"Overall, builders and developers in the 55 plus housing market are reporting strong demand across the country,” said Chuck Ellison, chairman of NAHB's 55+ Housing Industry Council. “However, builders need to continue to manage rising construction costs to keep homes in 55 plus communities at affordable price points." Ellison is also the vice president of land of Miller & Smith in McLean, Va.
All three index components of the 55 plus single-family index posted increases from the previous quarter: Present sales rose six points to 72, expected sales for the next six months increased five points to 70 and traffic of prospective buyers jumped 10 points to 53.
The 55 plus multifamily condo HMI posted a gain of three points to 47. The index component for present sales increased three points to 51, expected sales for the next six months fell four points to 49 and traffic of prospective buyers rose seven points to 38.
Two of the four components of the 55 plus multifamily rental market went up from the third quarter: present production increased six points to 60 and present demand for existing units rose four points to 67. Future expected production and future expected demand both fell two points to 54 and 62, respectively.
"Like the broader housing market, the 55 plus HMI is benefitting from the recent decline in mortgage rates," said Robert Dietz, chief economist for the NAHB. "Favorable demographics and solid home owner wealth should continue to support demand for new 55 plus housing."
