24/7 Wall St.

The National Association of Home Builders (NAHB) reported today that its housing market index for 55+ single-family housing rose to 46 in the first quarter of 2013, up 19 points year-over-year and the highest first-quarter total in the 5-year history of the index. A score above 50 indicates that more builders see market conditions as good; below 50 indicates that market conditions are poor.

The important thing about the index is that this demographic, usually called “baby boomers,” is very large and the older people get, the more likely they are to own a home. In a conferenc presentation today, homebuilder Hovnanian Enterprises Inc. (NYSE: HOV) noted that 77.6% of people aged 55 to 64 own a house and of those 65 and older, the ownership rate jumps to 80.7%.

If older Americans are going to buy new homes in communities designed for active adults, they must be able to sell their existing homes. That could mean that builders like Hovnanian and others will need to be wary of over-building for the older buyers unless the housing market really starts to take off again. There could be a very fine line between success and failure in the market for new homes for older Americans.