Each quarter since its inception in 2008 the National Association of Home Builders’ (NAHB) 55+ Housing Market Index (HMI) is used to measure builder confidence in the 55+ housing market. The 55+ single-family HMI measures builder sentiment based on a survey that asks respondents to evaluate market conditions as good, fair or poor in a variety of areas: current sales, prospective buyer traffic and anticipated six-month sales. An index value below 50 indicates that more builders view conditions as poor than good. While all index components of the HMI remain below 50, third quarter 2012 indices increased considerably from a year ago. In fact, the index more than tripled year over year from a level of 12 to 36; this is its highest reading in four years and is being touted as a herald of market recovery by NAHB.
In particular, the HMI index improvement may bode well for those aged 55 and better who have been unable to sell their homes. Per NAHB Chief Economist, David Crowe, “Like other segments of the housing industry, the market for 55+ housing is continuing on a steady path, driven by improving conditions in additional markets around some parts of the country.” While the indices for multi-family condos and multifamily rental exhibited more modest growth, their improvement nonetheless added to the optimism. The speed of recovery may depend on other market factors such as site availability and the home mortgage companies’ willingness to lend.