A leading indicator of housing starts suggests an uptick in home construction.
The LegalShield Housing Activity Index is up 4.3% compared to a year ago, while a rise in housing permits of more than 7% also suggests supply could improve this year.
Headwinds remain though, as James Rosseau, LegalShield’s chief commercial officer explains.
“The potential for new trade restrictions could increase the price of key materials, such as lumber, steel, and aluminum, and that could lead to weaker construction investment. This is a development that should be closely monitored in the weeks and months ahead,” he said.
LegalShield’s Real Estate Index shows a less optimistic picture, declining 4.7% since early 2017, due to a slowdown in sales due to tight inventory.
“Overall, these effects point to flat growth in existing home sales over the next two to three months, though sales may improve later this year if housing starts continue to rise, as expected,” Rosseau said.
The firm also tracks the financial stress of consumers and that index was unchanged in February.
“We are concerned about worrisome trends, such as elevated consumer debt levels and a 12-year low in the personal savings rate,” Rosseau added. “Nevertheless, LegalShield data points to continued low consumer financial stress for the first half of the year.”
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