Builder confidence in 55+ housing a good sign for overall home supply

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Homebuilders are growing confident in 55+ communities, which could suggest more movement in the housing market at a time when homeowners continue aging in place.

Builder confidence in the 55+ housing market jumped six points to 66 from the third quarter to the fourth quarter, according to the National Association of Home Builders' 55+ Housing Market Index. The data is measured on a 0-100 scale, where a reading over 50 suggests builders are reporting more positive than negative conditions.

This is a good sign for the overall market as inventory, particularly more affordable housing stock, has been limited. People continuing to age in place are keeping existing-home supply out of the market and helping push prices upward on tighter competition. Homeownership tenure hit an all-time high in the fourth quarter, with homeowners staying put an average of 8.3 years in the fourth quarter, according to Attom Data Solutions.

Better builder sentiments on the senior housing market can be attributed to recent mortgage rate dips and a healthier consumer landscape.

"Like the broader housing market, the 55+ HMI is benefiting from the recent decline in mortgage rates," said NAHB Chief Economist Robert Dietz in a press release. "Favorable demographics and solid homeowner wealth should continue to support demand for new 55+ housing."

Like other segments of the market, builders of 55+ housing must also stay mindful of construction costs, which have contributed to affordability hurdles for buyers as prices for lumber and other materials have elevated.

"Overall, builders and developers in the 55+ 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+ communities at affordable price points."

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Homebuilders Housing market Housing inventory Purchase Real estate NAHB Attom Data Solutions