Confidence is high, financial stress is low and that’s good for the housing market
Consumers are showing an elevated level of confidence in their finances and the economy, which should help support the US housing market.
The LegalShield Law Index ranks consumer and business sentiment based on demand for legal services.
“Despite some indications of a slowing economy, the LegalShield Law Index suggests US consumers remain on sound footing,” said Scott Grissom, Senior Vice President and Chief Product Officer, LegalShield. “Across all legal services measured, consumer stress is declining, and housing activity is increasing.”
The index indicates that recession risk is low and that the housing market should benefit from the positive economic sentiment, despite ongoing concerns.
The LegalShield Housing Activity Index, a leading indicator of housing starts, increased from 113.6 in Q2 to 119.3 in Q3, its highest point since 2005.
Affordability issues remain though as residential investment contracted again in the second quarter, the sixth consecutive quarter of negative growth, as supply of lots, trade tensions and a tight labor market have elevated the cost of materials and labor for homebuilders.
“Overall, LegalShield data suggests the potential for further near-term improvements in housing activity, but a sustained resurgence appears less likely given current economic headwinds facing the industry,” added Grissom.
Financial stress
The LegalShield Consumer Financial Stress Index improved by 3.3 points in Q3 to 74.0, its strongest reading in more than a year.
But there are several concerns including a job growth slowdown; wage growth declines as the rate recently fell below 3% for the first time in more than a year; trade tensions; and deteriorating global economic conditions affecting business confidence.
In the near-term though, consumer financial stress remains low, meaning that consumers are well-positioned for the rest of the year.
