As a number of housing market and economic factors continue to gain momentum across the country, a recent report from the National Association of Home Builders found that builder confidence in the 55-plus housing market surged during the first quarter this year.
According to real estate data from the industry group, builders found the financial safety and soundness needed to start building homes for this sector of buyers during the three-month period. The 55-plus Housing Market Index gained 10 points on an annual basis to push the index to 27 out of 100.
This is the highest the HMI has been since being founded in 2008. Specifically, the index measures the current sales rate in the market, as well as buyer traffic and future sales expectations to measure the industry's overall performance.
Consumer, builder optimism gaining ground
An official with the NAHB noted construction firms are becoming more optimistic about current and future conditions of the real estate segment.
"We continue to see increased optimism from builders and developers in the 55-plus housing segment," said NAHB 50-plus Housing Council chairman W. Don Whyte. "We are servicing the largest growing group of buyers that we have ever seen in this age category, and it is a population that is dramatically different from what it was only a few years ago. This creates an opportunity for builders and developers in this market to create communities that address the specific needs of the 55-plus consumer."
The single-family measure of the index experienced a 12-point gain to 27 out of 50, the report found. However, experts say expected future sales could push this index much higher in the coming months.
Meanwhile, the 55-plus multifamily condo index increased to an all time high of 15, rising 7 points from a year ago. Since the housing option is a popular choice for many senior homeowners, especially those in their retirement years, future sales of these properties are anticipated to surge even more in the future.
Housing affordability rising
Since many buyers in the 55-plus market are in fact in their retirement years, and therefore on a fixed-income, many of them may be able to make more financially sound decision toward homeownership, as the current level of home affordability is at an all-time high. According to a recent report from Fiserv, the monthly payment on a conventional mortgage now accounts from just 12 percent of a median household's income.