Purchasing power is shrinking for prospective buyers as record-high home prices feed inflation, and data from LegalShield’s Housing Construction Index showed the steepest decline on record (7.8 points) as homebuilders manage supply chain and labor challenges.
This decline as well as other metrics, including a decrease in residential permits (7.7%) in September, suggest that homebuilding activity is unlikely to rebound in the near future.
“Our data reveals that members are shifting their focus away from real estate and home purchases and toward consumer finance, employment, and landlord/tenant advice from our network of law providers,” said Jeff Bell, CEO of PPLSI, parent company of LegalShield. “There’s more pressing matters on their minds with rising inflation, federal aid, and loan and eviction moratoriums expiring.”
Inflation is also restricting consumer spending, as prices rise on essential goods and services, and the data shows that inflation-adjusted disposable income has decreased five of the last six months. This may lead to increased usage of short-term financial tools, which will impact the consumer stress index next year.
While inflation pressures continue to rise, favorable employment trends are cushioning some positive developments and the Consumer Stress Index improved in October. Bankruptcies and foreclosures continue to remain at historically low levels.