According to the latest LegalShield Law Index, the housing market may be poised for a significant rebound, but factors such as the recent trade tariffs imposed by President Trump could complicate things.
Released monthly, the LegalShield Law Index tracks factors such as housing starts, foreclosure starts, and consumer confidence, compiling indices based on LegalShield’s proprietary data culled from their client base. The Law Index is divided up into sub-indices that track different sectors of the economy, each tied to other key economic reports or indicators. This month, LegalShield spotlights activity on the LegalShield Housing Activity Index, which measures housing construction and which decreased in March but still remains 2.8 percent higher year-over-year. It was up 4.3 percent year-over-year during February.
LegalShield’s latest report notes that housing starts remain near post-recession highs in spite of declining slightly beginning in February after surging to their highest level in a decade during January. According to LegalShield, new housing unit authorizations expanded 18 percent and housing permits expanded 6.5 percent during the last 12 months.
“While rising interest rates may constrain new home construction to some extent, the combination of low inventories and high prices of existing homes for sale and the underlying strength of the U.S. economy point to stronger building activity in the near term," explained James Rosseau, LegalShield's CCO. "However, a key development to monitor is the growing likelihood of trade actions by the United States and its trading partners, particularly China, that could raise the prices of steel, aluminum, and lumber. If this occurs, it could lead to weaker construction investment and cause the LegalShield Housing Activity Index to stagnate or decline."
The other four sub-indices comprising the LegalShield Law Index include the Consumer Financial Stress Index, Real Estate Index, Bankruptcy Index, and the Foreclosure Index. The Real Estate Index, Foreclosure Index, and Bankruptcy Index indicate that existing home sales, foreclosure activity, and bankruptcies, respectively, will likely remain “muted” in the near term, according to LegalShield.
The Consumer Financial Stress Index, however, decreased 1.0 point in March to 72.3, the lowest recorded score for that index ever. According to LegalShield, this indicates “that consumer financial health is strong and likely to remain so throughout the first half of 2018.”
"Overall, consumers are in a good position right now," Rosseau said. "Although rising consumer debt levels are a potentially worrisome trend in the medium term, LegalShield data, which are based on actual consumer behavior rather than perception, indicate that consumer financial health should remain robust in the months ahead."