ADA, Okla.–(BUSINESS WIRE) — The May 2020 LegalShield Law Index, a suite of leading indicators of the economic and financial status of U.S. households and small businesses, saw its Housing Activity Index reach an all-time high, suggesting that homebuilding may recover more quickly than other sectors of the economy from the coronavirus-induced shutdown. A separate Real Estate Index tracking home sales likewise improved in May, suggesting that existing home sales may improve over the next three to six months. LegalShield has been measuring consumer demand for various legal services for nearly 16 years.
“Our two main real estate sub-indices snapped back from April’s lows, indicating that while the U.S. economy may take months or years to fully recover from the COVID-19 recession, a ‘V-shaped’ recovery in residential homebuilding is increasingly likely,” said Scott Grissom, Senior Vice President and Chief Product Officer, LegalShield. “The data suggests residential real estate is likely to rebound faster than other sectors of the economy. If true, then the coronavirus-induced shutdown of 2020 will ultimately be viewed as merely a speed bump in real estate’s strong and steady recovery from the lows of the Great Recession a decade ago. We expect homebuilders and brokers to be busy this summer.”
Mr. Grissom noted that the five sub-indices that comprise the LegalShield Law Index tend to lead an existing economic indicator that sheds light on the health of the U.S. economy (i.e., the target economic indicator). The LegalShield Housing Activity Index, for example, tends to lead U.S. Census data on housing starts (a key economic indicator) by 1–2 months; the LegalShield Real Estate Index tends to lead monthly existing home sales as published by the National Association of Realtors, offering an early look at emerging trends in the housing market. Since LegalShield’s consumer member intakes are logged in real-time as they occur, there is no lag in compiling the data, as common with other economic and housing surveys and, therefore, are predictive and actionable.
- In May, the LegalShield Housing Activity Index improved 11 points from 112.3 to an all-time high of 123.3, while housing starts plunged more than 30% in April, the lowest volume since 2015, according to the US Department of Commerce. LegalShield data and other leading indicators now point to a sharper housing recovery. For example, April spending on private residential construction was still 6.2% above year ago levels, while mortgage purchase applications have increased for six consecutive weeks, suggesting there is pent up demand in the housing sector.
- In May, the LegalShield Real Estate Index increased 5.9 points to 102.6, roughly in line with early-2020 levels before the pandemic. Meanwhile existing home sales nosedived in April, falling nearly 18% in the sharpest decline since mid-2010. April, however, now appears to have been the worst of the pandemic-related decline in home purchasing, as easing social distancing measures combined with record low mortgage rates have spurred housing demand in the past month.
Although homebuilding activity was historically weak in April and may not return to pre-COVID levels for several more months, LegalShield and broader economic data suggest that housing activity is better positioned to rebound than a typical recession.
The LegalShield Law Index reflects the demand for legal services among the company’s provider law firms in all 50 states. The Law Index is a suite of leading indicators of the economic and financial status of U.S. households and small businesses, including the LegalShield Foreclosure Index in addition to the Consumer Financial Stress Index, Housing Activity Index, Real Estate Index, and the Bankruptcy Index. For full LegalShield Law Index findings visit https://www.legalshield.com/law-index.