Home sales and housing starts lost some steam last month in the wake of back-to-back interest rate hikes, and one economist says that dips in both those indicators could tempt the Bank of Canada to hold its benchmark policy rate steady come September.In a note from Wednesday, Desjardins Economist Ma...
“The Bank of Canada will likely take some comfort in the sales and starts weakness documented this week, particularly after recent cooling in GDP, employment, trade, and core inflation,” he says. “Combined, these more downcast indicators suggest the painful medicine of higher interest rates is working to cool down economic growth and bring price pressures to heel.”
Still, he stresses that “so much is subject to change” between now and September. As well, he points out a peculiar trend with respect to aggregate new construction, which “remains very high relative to historical levels” and deviates from the trajectory of sales. As immigration continues to surge, rents and house prices are bound to “push higher” and housing inflation stands to only get more “persistent,” says Holt. As well, he adds, price pressures in other service categories — including airfare, recreation, transportation, healthcare, and auto insurance — remain “unacceptably high.”
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