Photo: James Bombales
It’s been a cool year so far for the Canadian housing market, and most economists are predicting that it will quite some time before activity starts to pick up again. But according to one expert, there were some positive indicators to be found in last month’s housing data.
“In an otherwise quiet week for economic data, we did get an update on the trigger of the last recession – the housing market,” writes TD senior economist Leslie Preston, in a recent note.
“There a few signs of froth there,” she writes. “Housing starts continued their gradual upward trend in May. Residential construction has been on a stronger footing this year after weakness in multi-unit structures drove a lull in 2017.”
In other words, while sales have been falling on a year-over-year basis and prices remain stubbornly flat, a stronger new construction market could be a sign that things will start to heat up again later in the year.
Preston does acknowledge that other housing data was less than encouraging last month.
“The existing home market, on the other hand, was a bit disappointing in May,” she writes. “Sales have trended down recently, as the market struggles with a lack of listings.”
Still, she is optimistic that activity will increase moving forward, if at a slower pace than previous years.
“Forward looking indicators suggests activity should improve in the months ahead,” she writes. “In time, construction of new homes should help, but improvement is expected to be gradual as affordability constrains demand.”
It’s a sentiment that was echoed by RBC senior economist Robert Hogue earlier this month. While he’s not optimistic about sales numbers — which he writes could fall by over 8 per cent by the end of the year — he believes that prices will recover in the coming months.
“Nonetheless, the balance between demand and supply remains largely as we anticipated — balanced — and price gains are decelerating roughly in line with our forecast,” writes Hogue, in a recent note. “So at this stage, our the projected 1.8 per cent annual price increase for 2018 nationwide still looks achievable.”