Housing sector

While consumer stress remains historically low, accelerating inflation and slowing housing sector tell a different story

ADA, Okla.–(BUSINESS WIRE)–New data from LegalShield, the consumer brand of PPLSI and the leading provider of membership-based legal services and identity theft protection plans, shows that once again the global stress consumer prices remain subdued and relatively unchanged from September, despite consumer prices rising at a healthy pace. 6.2% annual rate according to the Bureau of Labor Statistics. Record house prices are also fueling accelerating inflation and weighing on buyer sentiment, and potential buyers are seeing their purchasing power decline.

Notably, data from the LegalShield housing construction index revealed the biggest decline on record, plunging 7.8 points in October, as homebuilders battle rising input costs, disruptions to supply chain and labor shortages. Several metrics point to a slowdown in construction activity, including residential permits down 7.7% in September due to severe shortages of available land and other inputs. Data from LegalShield is a leading indicator for housing starts and suggests residential construction activity is unlikely to rebound in the near term as rising costs and falling demand impact the market .

“Our data reveals that members are shifting their focus from home and property purchases to consumer finance, employment and landlord/tenant advice from our network of legal providers. There are more pressing questions on their minds with rising inflation, federal aid, and expiring loan and eviction moratoriums, said Jeff Bell, CEO of PPLSI, parent company of LegalShield.

Higher prices for essential goods and services are reducing consumer purchasing power and, if sustained, could hamper consumers’ ability to spend elsewhere in the economy. Inflation-adjusted disposable income has fallen in five of the past six months and the trend is expected to continue over the holiday season. In response, consumers may turn to short-term financing tools such as credit cards and buy-it-now-pay-later programs, which could potentially increase financial stress in the months ahead.

Key highlights and trend forecasts

LegalShield Consumer Stress Index

  • The Consumer Stress Index fell (improved) 0.9 points in October, remaining virtually unchanged and recovering from a half-point increase the previous month.

  • Favorable employment trends and the cushion of increased savings accumulated during the pandemic are positive developments, although stress may further increase as inflationary pressures spread through the economy.

  • Despite a strong financial foundation, the gap between consumer perceptions of the economy (which are austere) and actual economic fundamentals (which are generally strong) is widening. High inflation is the main reason for this divergence.

LegalShield Bankruptcy Index

  • Bankruptcies continue to hover at historic lows. The LegalShield Bankruptcy Index rose (deteriorated) 0.6 points to 19.5 in October, and total seasonally adjusted bankruptcy filings fell 0.9% to 30,703 in September and down 19% from a year ago.

  • Increased government support during the pandemic has provided consumers with a cushion and limited bankruptcies. As the economy continues to normalize, bankruptcies could rise next year.

LegalShield Foreclosure Index

  • The foreclosure index rose slightly in October and remains virtually unchanged and close to historic lows.

  • Although foreclosure filings have doubled year-on-year, they remain 70% below levels 2 years ago, underscoring the effect of pandemic-related assistance programs and legislation.

  • Unlike other recessions, home values ​​have skyrocketed since the start of the pandemic, leading to high levels of equity for many homeowners; CoreLogic reports that owners earned an average of $51,500 in equity in the second quarter of 2021, five times the gain in the same period a year prior.

LegalShield Home Sales Index

  • For the first time in 6 months, the home sales index fell sharply. Although existing home sales rose 7% in September to an 8-month high, the level is still more than 2% below year-ago levels.

  • Rapidly rising house prices are pushing buyers out of the market; well-capitalized buyers make all-cash offers and make it harder for those who need financing to win a deal. This has pushed first-time buyers out of the market, where they represent the lowest share of sales in 6 years, according to the National Association of Realtors.

  • With interest rates likely to rise in the coming quarters, rising mortgage rates will continue to dampen demand going forward.

the LegalShield Economic Stress Index is comprised of the economic and financial condition of US households and small businesses and provides real-time actionable insights to see the direction of the US economy in the near term. The five highlighted sub-indices include Consumer Stress Index, Bankruptcy Index, Foreclosures Index, Home Construction Index and Home Sales Index, and are constructed at from LegalShield proprietary data. The sub-indices reflect demand for various legal services over the past 15 years and are based on data collected by LegalShield provider law firms in all 50 states.

About LegalShield

A pioneer in democratizing affordable access to legal advice, protection and representation, LegalShield is the world’s largest platform for legal, identity and reputation management services protecting individuals and businesses in America North. Founded in 1972, LegalShield and its privacy management company, IDShield, have provided individuals, families, businesses, and employers with the tools and services needed to lead fair and safe lives at an affordable price. Through technology and innovation, LegalShield is disrupting the traditional legal system and transforming how and where people receive legal advice and services, with access to thousands of qualified and trusted lawyers and law firms. . To learn more about LegalShield and IDShield products and services, visit LegalShield.com and IDShield.com.

About PPLSI

A champion of equal access to justice and security, PPLSI for 49 years has provided individuals, families, businesses and employers with the tools and services needed to live just and secure lives. Under PPLSI, our consumer brand, LegalShield, is disrupting the legal services industry by empowering everyone with the resources and tools to get justice affordably. We are transforming the traditional way of receiving legal advice and services and providing qualified and trusted lawyers and law firms in the palm of your hands. Our security brand, IDShield, specializes in privacy and reputation management and protects your data and information online. To learn more about PPLSI and our brands and products that currently improve and empower 4.5 million people and 140,000 businesses in North America, visit PPLSI.com, LegalShield.com and IDShield.com.