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Housing Construction Outlook Remains “Cautiously Optimistic”

Consumers are feeling relatively relaxed about their finances; foreclosures are wallowing near 30-year lows; and the outlook for the housing market is mostly positive, albeit with a few worrisome headwinds, according to the latest LegalShield Law Index, released Tuesday.

LegalShield’s Housing Activity Index rose in April, amid declining foreclosures and an uptick in housing starts in March. Housing starts are up 1.9 percent, reaching an annual rate of 1.32 million, which according to LegalShield is one of the highest rates recorded since the recession. “Although LegalShield data suggest housing starts should continue to improve in the coming months, several headwinds facing construction activity have worsened in recent weeks,” said James Rosseau, Chief Commercial Officer at LegalShield.

The major threats to housing are rising interest rates and deteriorating trade relations, according to Rosseau.

"The price of framing lumber has risen over 40 percent from a year ago due to import tariffs, while confrontations with key U.S. trading partners, particularly China, have also led to increased costs for steel and aluminum,” he added.

Despite these headwinds, Rosseau said, “For the time being, however, we are cautiously optimistic about new housing construction in 2018."

The Housing Activity Index climbed 3.5 points over the month of April to 115.2.

In fact, the Conference Board’s Consumer Confidence Index and Michigan’s Consumer Sentiment Index also posted improvements in April, which LegalShield said is to be expected “in light of multi-decade low unemployment levels.”

The LegalShield Foreclosure Index, another component of the LegalShield Law Index, fell to a record-low in April, declining 9.1 points to 54.3. The Foreclosure Index for April “points to muted foreclosure activity over the coming months,” according to LegalShield.

LegalShield’s Consumer Financial Stress Index declined 1 point over April, reaching a record low for the index at 71.3. In fact, April’s record just beats the previous index record charted a month earlier.

"Financial stress is likely to remain subdued while consumer confidence should remain elevated over the next one to three months due to the combination of low unemployment, reduced tax burden, and slowly rising wages," Rosseau said.

About Author: Krista Franks Brock

Krista Franks Brock is a writer and editor who has covered the mortgage banking and default servicing industries since 2011. Previously, she served as managing editor of DS News and Southern Distinction, a regional lifestyle publication. Her work has appeared in a variety of print and online publications, including Consumers Digest, Dallas Style and Design, DS News and DSNews.com, MReport and theMReport.com. She holds degrees in journalism and art from the University of Georgia.
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