Housing Sales Index hike endures for a large segment that is prohibited from home building
ADA, Okla.--LegalShield today released its May Economic Stress Index, a suite of leading indicators of the economic and financial status of U.S. households and small businesses. Two of its sub-indices, The LegalShield Housing Construction and Housing Sales Indices, both climbed for the third straight month to reach record highs. LegalShield continues to receive and resolve an unprecedented number of requests from members seeking attorney reviews of their mortgage and commercial real estate contracts.
“Over two million homeowners in the US are still in forbearance plans, and another nearly two million families, although not in forbearance, are at least 90 days delinquent on paying their mortgages as of April”
The LegalShield Economic Stress Index™ is the only index of its kind that reflects prevailing economic conditions and likely developments for the months ahead based on actual demand for various legal services. Our index comprises five sub-indices – Consumer Stress, Bankruptcy, Foreclosure, Housing Construction, and Housing Sales – constructed from the company’s proprietary data, accumulated over the past 16 years. Each time a provider law firm, in all 50 states, receives a member request for services, the request is logged as an “intake” in one of roughly 70 unique areas of law (e.g. real estate, LLC formation, etc.). The company on average receives 185,000 intakes per month from over 1.8 million memberships, including individuals and small businesses, a statistically meaningful sample.
The LegalShield Foreclosure Index remains historically low, although it increased slightly in May. “Over two million homeowners in the US are still in forbearance plans, and another nearly two million families, although not in forbearance, are at least 90 days delinquent on paying their mortgages as of April,” said Jeff Bell, LegalShield CEO. “This area bears close watching. The Foreclosure Index could rise after the June 30th expiration date for the federal foreclosure moratorium, even though several banks have stated they would extend eviction moratoriums independently until 2022. There is also the hope is that many will work out alternative plans that won’t result in a foreclosure; nevertheless, we are preparing for the possibility of increased activity in this area among our members.”
The LegalShield Housing Construction Index rose from 144.4 to 146.7 in May, a new all-time high. As LegalShield members identified plots of land on which to build their dream homes, they consulted with network attorneys on issues such as lot approvals, zoning laws, ordinances, covenants, building codes, permits, and plans. Before commencing the building phase, members had attorneys review contractor agreements and enhance their protection around the scope of work, timing of the work, payment terms, warranties, dispute resolution, and more.
While strong housing demand and low inventories should keep housing construction strong by historical standards, supply chain constraints may continue to delay projects and could slow construction activity compared to earlier this year.
The LegalShield Housing Sales Index jumped 5.5 points in May to 121.1, the highest level on record. The most remarkable activity within this index is that the company’s mortgage document service hit its three highest readings ever in the last three months (the highest coming in March). Existing home sales will likely stay strong through the end of the year, though rising prices may lead to affordability constraints.
Keybridge LLC, a boutique economic and public policy consulting firm based in Washington D.C., is responsible for independently compiling and analyzing the LegalShield data and developing the accompanying economic narrative. A PDF of LegalShield’s full April Economic Stress Index can be downloaded here: https://www.legalshield.com/economic-stress-index
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