Steady Canadian Housing Market Aids Economic Rebound

[DailyFx]

The Canadian housing market should help bolster the economic recovery seen in recent GDP numbers. Following the unexpected growth in building permits through May, the Canadian Mortgage and Housing Corporation's indicator of new construction activity performed modestly better than expected. Starts grew 217,800 units through June - beating forecasts of a 216,000 reading, but still a contraction 4.3 percent drop on the month. Looking into the breakdown of the report however, the details were more discouraging indicators of consumer confidence and tolerance for interest rates. Single family homes dropped 7.8 percent on the month and multi-family units slipped 3.0 percent. More telling of overall trends, single family starts plunged 19.1 percent over the past year to be offset by a 14.5 percent jump in apartments and condos. The divergence over the longer-term suggests Canadian consumers are finding it more difficult to afford mortgages with credit conditions boosting lending rates; and residents are instead looking to rent. - John Kicklighter, Currency Analyst for DailyFX.com