NIC Chief Economist Beth Burnham Mace

Assisted living occupancy in the second quarter fell to 85.1%, the lowest point since the National Investment Center for Seniors Housing & Care began collecting data in 2006, the organization said Thursday.

The rate was a 20 basis point drop from the first quarter and as with other national fundamentals data released by NIC on Thursday represents 31 metropolitan markets.

Construction starts appear to be slowing, however, NIC Chief Economist Beth Burnham Mace told McKnight’s Senior Living.

“This data does get re-stated, but despite the re-statements that can occur, we are still seeing a significant downward trend in assisted living starts data,” she said. “For example, in the second quarter, starts accounted for 3.5% of existing inventory. In late 2015, that same figure with 6.5%. So even if things get revised, you can’t deny that that trend is occurring.”

Independent living occupancy also declined, falling from 90.5% in the first quarter to 90.2% in the second quarter, but the rate was not an all-time low.

“Independent living hasn’t been below 90% since 2013, but there are pressures building,” Mace said. “Construction is still more significant in assisted living than in independent living, but we are starting to see some upward pressure.”

Combined senior living (independent living and assisted living) occupancy was 87.8% in the second quarter compared with 87.9% a year ago. NIC said it was the lowest senior living occupancy level since the second quarter of 2011.

Rates and trends varied by market, however. “[L]ocal economic and housing market performance is driving the more substantial losses and gains we’re seeing in certain areas,” Chuck Harry, NIC’s head of research and analytics, said in a statement. “Zoning, regulations and shifting demographics may also contribute to this variation,” he added.

San Antonio, for instance, saw the largest occupancy bump from a year ago, increasing from 78.5% to 82.9%, whereas Los Angeles saw the largest year-over-year decrease, falling from 90.1% to 87.9%.

“In general, we tend to see that more construction activity tends to happen in the markets that have fewer barriers to entry,” Mace said. Markets in states such as Arizona, Texas, Florida and Georgia often experience population growth and have fewer barriers to development, she added.

In California markets such as San Jose, by contrast, Mace said, “you don’t see as much development activity because it’s much more difficult to get a piece of land entitled. And if you can get a piece of land entitled, it’s not necessarily going to be the highest and best use for that land to be senior housing.”

So, nationally, what will the market look like later this year or next?

“My crystal ball isn’t all that precise, but I would think, theoretically, with the starts slowing down and assuming that we don’t slip into a recession — which, I’m an economist, and I would think that we’re not heading that way right now — you should have fundamentals for demand that would be relatively strong, and you’re going to have a supply that should be based on the starts today; that should translate into a slowdown in inventory growth, which should allow a more balanced market to occur with some upward pressure on occupancy rates,” Mace said. “That said, it’s going to vary by market, and if some broad thing happens that affects consumer confidence, that could offset what I said.”