Canadian housing holds strength as rest of economy sags
By Andrea Hopkins
TORONTO (Reuters) - Canadian housing starts rose more than expected in June and new home prices climbed in May, reports showed on Thursday, suggesting Canada's long housing boom still has momentum even as the rest of the economy struggles.
The Canadian Mortgage and Housing Corp said the seasonally adjusted annualized rate of housing starts rose to 202,818 units in June from a downwardly revised 196,981 in May. Analysts had expected a slowdown to 190,000.
The building boom in June followed a greater-than-expected 0.2 percent increase in new home prices in May from April, according to a report by Statistics Canada. The price gain outpaced forecasts for a 0.1 percent increase and was spurred by a 0.5 percent rise in Toronto's hot housing market.
"Notwithstanding worries tied to other parts of the Canadian economy, housing continues to post solid readings," CIBC World Markets economist Nick Exarhos said in a research note.
Canada's housing market has climbed unsteadily higher in the six years since the global financial crisis despite warnings from economists that a plateau, or a slowdown, or a crash loomed.
Financial authorities have spoken of a three-speed housing market, with Toronto and Vancouver sizzling, Canada's energy-producing heartland of Alberta and Saskatchewan suffering due to low oil prices, and the rest of the country relatively stagnant.
"The momentum in the housing market through the spring and into the summer is undeniable," David Tulk, head of global macro strategy at TD Securities, wrote in a note. "Low interest rates and the release of pent-up demand following a miserable winter has helped drive this increase.
"From the perspective of the Bank of Canada, the housing market does provide some positivity in contrast to weakness in business investment and in exports." Continued...