Home builder confidence in the housing market is waning because older generations are leaving homeownership for the rental market.
According to the National Association of Home Builders, sales of single-family homes to buyers older than 55 plummeted compared to the previous quarter. Multifamily sales for buyers 55 and older, on the other hand, spiked upwards to the highest reading ever recorded.
Builders have been struggling to maintain confidence amid issues like labor shortages and rising material costs. As the Spring homebuying seasons takes full effect, however, the NAHB expects a sizable increase in single-family sales.
- Single-family home sales to buyers 55 and older decreased from 79 to 70 on the Housing Market Index
- Multifamily home sales to buyers 55 and older increased from 54 to 64 on the HMI
- Baby Boomers (ages 55 and older) who are renting surged 28% from 2009 to 2015
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, according to the latest Housing Market Index from the National Association of Home Builders.
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 Miller & Smith vice president.
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.
View the original article at Housing Wire