Perhaps he meant that we have lost a sense of higher purpose?

Yes, that's exactly what Nietzsche means. I'm sorry for not making it all too clear. The loss of a sense of higher purpose is what he calls 'passive nihilism', and Nietzsche would urge us to overcome it by finding our own higher purpose.

He warns us that we would enter an age of greed, but also an age where mediocrity prevails and the outstanding are trampled upon, an age of relativism where everything is equally good and where people feel good about themselves but are unable to create their own values - sheep people.

Let's see if I can pen down a new post to clarify this.