Canada Data Preview: Housing In The Spotlight

By Yali N'Diaye

     OTTAWA (MNI) - The October 9 data week will start and end with housing in

the spotlight, from the permit stage to actual starts to selling prices.

     The most important for markets will be CMHC September housing starts report

on Tuesday, with analysts in a MNI survey expecting annualized starts to come in

at 210,000 units, a nearly 6.0% decline from August, albeit still robust.

     Forecasts range from 205,000 to 220,000 at a seasonally adjusted annual

rate.

     Desjardins economists, expecting housing starts to decline to an annual

rate of 210,000, argued in their research note that higher interest rates since

the summer should begin to impact residential construction.

     TD analysts expect the softening to be led by multi-family units, while

single-family starts could bring some positive offset. Overall starts should be

led by Ontario, the bank expects.

     Scotiabank analysts expect housing starts to edge down to a still

"elevated" 210,000 rate, "given that the volume of dwelling permits being issued

is a leading indicator and remains elevated itself."

     Building permits, a leading indicator of construction activity, to be

released on Tuesday shortly after housing starts, rose 10.7% in May, 4.4% in

June, before sliding 3.5% in July.

     For August, BMO economist Benjamin Reitzes forecasts a further 1.0%

decrease in construction intentions, led by the residential sector, which

recorded a 2.2% decrease in July.

     Conversely, "broader economic strength and government infrastructure

spending should provide a boost to non-residential activity," he wrote in his

weekly commentary Friday.

     On the price front, BMO sees new housing prices edging up 0.2% in August,

for a 12-month gain of 3.9%, a pick up from 3.8% in July.

     The more current and more comprehensive Teranet-National Bank House Price

Index, which will be released on October 12, the same day as Statistics Canada's

New Housing Price Index, should rise at a slower year-over-year pace of 12.0% in

September, according to Capital Economics, after a 13.1% gain in August.

--MNI Ottawa Bureau; +1 613 869-0916; email: yali.ndiaye@marketnews.com

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