LegalShield released its December 2020 LegalShield Economic Stress Index™, its indicator of the economic and financial status of U.S. households and small businesses.
In its report, LegalShield found its Housing Construction Index spike to an all-time high, with expectations for building activity to remain strong into Q1 of 2021. Its Housing Sales Index also reached an all-time high, which forecasts that demand for existing homes will also continue into 2021.
“Millions of Americans who have fared well financially over the last 10 months remain eager to spend more on housing in 2021,” said Jeff Bell, LegalShield CEO. “Many are working from home for the foreseeable future, have been able to save money, and want to improve upon and expand their immediate, daily surroundings. On the opposite side of the expanse are approximately 12 million renters who, at January’s end, will owe nearly $6K in back rent and utilities, reflecting the K-shaped recovery that has become evident in the U.S. economy.”
Highlights from the December 2020 LegalShield Economic Stress Index™ include:
- The Consumer Stress Index improved by 2.7 points in December, while the Conference Board’s Consumer Confidence Index decreased 4.3 points.
- The Bankruptcy Index improved 1.8 points in December, after rising in each of the prior two months. Bankruptcies were down 30% in 2020 from 2019, and a TransUnion consumer credit forecast predicts lenders will be more confident in 2021.
- The Foreclosure Index improved 0.5 points in December. Foreclosure activity has essentially been paused, but the Mortgage Bankers Association reported in the first week of December that the proportion of mortgage borrowers seeking forbearance rose to the highest level since August. This indication of financial stress is concerning, but the extensions of federal foreclosure protections for homeowners will likely prevent foreclosure activity from rising in the near future.
- The Housing Construction Index increased in December to reach the highest level on record. Housing starts are up 12.8% from 2019 but the National Association of Home Builders predicts that supply chain logistical delays and increased costs combined with a shortage in skilled construction labor could cause the construction boom to deflate as 2021 progresses.
- The Housing Sales Index rose 3.1 points in December to an all-time high. While sales remain historically elevated, they did decrease in November, likely due in part to lack of inventory, seasonal slow downs and soaring prices. Fannie Mae’s Home Purchase Sentiment Index reported that fewer Americans believe now is a good time to buy a home, but several positive trends like lower mortgage rates and a demand for single-family homes which propped up housing sales in 2020 are expected to continue in the new year.