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Nathan Janzen, Senior Economist at RBC Economic Research, suggests that the dip in Canada’s new housing starts to a 188.7k level in September from 198.8k in August marked a third straight slowing after a spike to (an unsustainably strong) 247k in June.    

Key Quotes

“The data is volatile and stronger housing permit issuance argues there could still be stronger near-term building activity in the pipeline.”

“The slowing in home building in recent months is broadly consistent with our view that those headwinds in the resale home market will ultimately spill over into slower homebuilding activity as well.     We expect housing starts will average ~195k next year.”

“Earlier housing market activity was probably too strong to be sustained.   The slowing to a more manageable pace of activity should be welcomed by the Bank of Canada and isn’t expected to prevent further gradual interest rate hikes.”