Is the housing boom ending?

Report reveals inflation and expiration of eviction ban weigh heavily on consumers' minds

Is the housing boom ending?

New data from LegalShield reveals that consumers are shifting their focus away from real estate and home purchases toward accelerating inflation and a looming foreclosure crisis.

For the first time in six months, LegalShield’s Housing Sales Index fell in October as prospective buyers continued to be priced out of the market. While existing home sales increased 7% to an eight-month high, sales were 2% lower than a year ago.

The LegalShield Housing Construction Index also plummeted to a record low, down by 7.8 points in October. The slowdown in construction activity points to the severe shortage in available lots and is unlikely to bounce back in the short term while increasing costs and dwindling demand impact the market.

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“There are more pressing matters on their minds with rising inflation, federal aid, and loan and eviction moratoriums expiring,” said Jeff Bell, CEO of PPLSI, the parent company of LegalShield.

Despite foreclosure filings having doubled annually, the Foreclosure Index held steady and near historically low levels in October – an effect of pandemic-related assistance programs of the government.

The Consumer Stress Index also remained virtually unchanged, improving by 0.9 points month over month. However, consumers are becoming more pessimistic about the economy due to high inflation.

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