After a period of historical lows, senior housing occupancy rose on a nationwide basis in the third quarter.
Average senior housing occupancy increased to 88%, up 30 basis points from the previous quarter’s 87.7% rate, according to new data from the National Investment Center for Seniors Housing & Care (NIC).
But as is always the case, the national numbers do not tell the whole story, as there are significant differences across markets.
Of NIC’s 31 primary markets, San Jose and Minneapolis had the highest occupancy rates in the third quarter, at 95.5% and 91.3%, respectively. Las Vegas and Houston, meanwhile, had the lowest occupancy rates in the quarter, at 82.3% and 81.5%, respectively.
San Antonio saw the most significant occupancy increase from the same time one year ago, moving from 80.2% to 84.6%. Baltimore saw the highest year-over-year decrease, going from 92.5% in the third quarter of 2018 to 90.6% in the same period this year.
The gains weren’t the same across all product types. Assisted living occupancy increased to 85.4% in the third quarter of this year, an improvement from a previous record low of 85.1% for the previous three quarters. Independent living occupancy increased to 90.2% in the third quarter, which is 10 basis points higher than it was this time last year, but still below where it was earlier in 2019.
New unit demand was up, totaling 4,977 units in the third quarter of this year, according to the latest data. At the same time, the number of units added to existing senior housing inventory cooled down to 3,832 units, the fewest since the middle of 2016.
NIC’s primary markets logged 17,932 new construction starts during the previous four quarters, representing the fewest new starts in five years. Construction starts added up to 2.8% of total existing senior housing inventory, a decrease from previous quarters.
Putting the pieces together, the new data can be seen as good news for the industry, according to NIC Chief Economist Beth Mace.
“I think the third quarter data showed favorable results for senior housing, with rising occupancy, relatively strong demand and a slowing pattern of construction activity especially for assisted living starts,” Mace told Senior Housing News.
Occupancy could continue to rise in future quarters, provided there are no surprises that could affect demand such a drop in consumer confidence, a crash in the stock market or an economic recession.
“The slowdown in starts is a good precursor for slowing inventory growth,” Mace said. “If demand holds up, this should translate into further occupancy gains.”