Home builders say they are less confident in the housing market for those older than 55 as more of this older generation move into renting, according to the latest Housing Market Index from the National Association of Home Builders.
The HMI is a survey of home builders which measures the housing market weighted on seasonally ingested high, average or low traffic. The monthly survey gathers builders’ insight on current single-family home sales and expectations for the next six months rated as fair, good or poor.
Compared to the previous quarter, sales of single-family homes to those over 55 years fell an astonishing nine points to 70. Expected sales for the next six months gradually rose seven points to 80, while traffic for perspective buyers was consistent at 51 points.
Multiple production challenges could explain the market drop.
There are many places around the country facing labor and lot shortages, along with increased building material costs, which are affecting production,” said Chuck Ellison, NAHB 55+ Housing Industry Council chairman and Land of Miller & Smith vice president.
Weather may also be a culprit in the disruption of housing sales.
“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,” NAHB Chief Economist Robert Dietz said.
But even as the single-family sector saw its sales decreasing, the 55+ multifamily HMI shot up 10 points to 64, the highest reading since the creation of the index in 2008.
In fact, a report from RENTCafé back in October shows that Baby Boomers are leaving homeownership in droves. Data from the U.S. Census Bureau shows the population of those ages 55 and older who are renting surged 28% from 2009 to 2015.
Despite concerns for the changing market, Dietz is confident sales will rise.
“Market conditions overall remain favorable, and we expect gradual continued growth in the 55+ housing sector,” he said.