This week's mortgage market update contains:
- Inflation slide may halt rate hikes
- Housing starts down in August, CMHC reports
- Fewer can afford city homes
This week's highlights:
- US Housing Starts Drop Once Again
- Canadian Consumer Price Inflation Remains Moderate in August
This week's Quote:
The undertaking of a new action brings new strength. - Evenius
Weekly Articles of Interest
Inflation slide may halt rate hikes
JEANNINE AVERSA
Aug 30, 2006 11:53 | thestar.com
WASHINGTON -- The economy grew at a 2.9 percent annual rate ..... picture of the economy: In the spring, it slowed sharply from ..... the 3 percent pace that analysts were expecting. Even though the economy
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Housing starts down in August, CMHC reports
ROMINA MAURINO
Aug 26, 2006 01:00 | Toronto Star
Weimer, senior economist with the Canada Mortgage and Housing Corporation ..... of mortgage equity withdrawal." "Essentially, they've been borrowing more
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Fewer can afford city homes
Aug 25, 2006 19:01 | thestar.com
for the Canada Mortgage and Housing Corporation in Ontario. "It's a terrific
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This Week's Highlights
- US Housing Starts Drop Once Again
- Canadian Consumer Price Inflation Remains Moderate in August
The US Census Bureau reported today that residential construction reached an almost three-year low at an annualized rate of 1.665 million units in August. This is down 6.0% from July and 19.8% from August 2005. Housing starts have fallen six of the last seven months. The decline in August was due to decreases in both single- and multiple-unit structures. Singles dropped 5.9%, while the more volatile multiples component fell 6.7%. On a regional basis, the Midwest saw the biggest decline at 12.2%, while the South and West decreased 6.1% and 5.5% respectively. Conversely, the Northeast saw an increase of 5.4% Housing starts are down 37.3% annualized in August/July from the second quarter. The weaker-than-expected data have led us to revise our Q3 GDP growth estimate downwards to 2.5% from 2.9% previously. The cooling housing market and slowing economy suggest the Fed will hold rates steady.
Canada’s consumer price index rose a moderate 0.2% in August, thus allowing the year-over-year rate to decline to 2.1% from 2.4% in July. The monthly gain was slightly larger than expected owing to less of an anticipated decline in energy prices (-0.2%) and a sizeable advance in mortgage interest costs (0.7%). However, with both natural gas and gasoline prices, as well as mortgage rates, declining in recent weeks, the upward impact of these factors should subside in the months ahead.
The Bank of Canada’s “core†index, which excludes natural gas and mortgage interest costs, as well as six other highly variable items and indirect taxes, rose 0.2% in August, keeping the year-over-year rate at 2.0%. A larger-than-seasonal increase in clothing and footwear prices of 2.0% in the month contributed to the monthly gain. Although the year-over-year rate in this component is down 1.8%, benefiting from a strong Canadian dollar, it is still up from -2.5% in July. With core inflation in line with the Bank’s 2% midpoint target, and the economy set to grow moderately, the central bank should remain comfortably on the sidelines in the months ahead. As always, we will keep our ear to the ground and make you aware of developments as they occur.
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