Despite a decline in home starts in June, homebuilder confidence in the single-family, 55+ market is on the rise. In fact, the second quarter marked the 11th consecutive year-over-year increase in confidence in this sector, according to the National Association of Home Builders (NAHB).
NAHB measures confidence in the 55+ sectors of both the single-family and multifamily markets each quarter. An index score below 50 reflects that more builders have a negative outlook on market conditions, while a score higher than 50 reflects a positive outlook among more than half of builders surveyed.
The single-family 55+ index charted a score of 56 in the second quarter, marking the highest second-quarter level the index has reached since its debut in 2008, according to NAHB. The index is up three points over the year and six points over the quarter.
Builders' outlooks on current home sales and expectations of home sales over the next six months contributed to the index's climb year-over-year in the second quarter, while perceptions of prospective buyer traffic detracted from the increase.
The index level for prospective buyer traffic fell six points annually in the second quarter to a level of 42, meaning more than half of builders feel prospective buyer traffic is currently slow.
Despite the slow traffic, NAHB's chief economist, David Crowe, attributes the overall climb in confidence in the 55+ market to "the slow but steady increase in existing home sales in the last three months."
"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," Crowe said. These buyers are also attracted to new construction, according to Steve Bomberger, chairman of NAHB's 50+ Housing council. Older buyers "are very selective and have high expectations," he said.
Compared to the 55+ single-family market, the 55+ multifamily market looks a bit lackluster. Homebuilder confidence in current sales, anticipated sales over the next six months, and prospective buyer traffic all dropped over the second quarter.
However, despite these declines, which brought the overall index reading to 38, NAHB noted this is the second-highest reading the multifamily index has shown in the second quarter of any year since the index began tracking confidence in 2008.
The highest reading was a score of 39, which occurred in both of the previous two quarters.
Builders are currently relatively confident about the 55+ rental market. This index stands at 53, after a 3-point annual rise in the second quarter, according to NAHB.