Canada: Housing back in the positive column – RBC

Josh Nye, senior economist at Royal Bank of Canada, notes that Canadian housing starts remained robust at 222,000 in July.

Key Quotes

“With robust housing starts and higher home sales in Q2, it looks like the residential sector made a positive contribution to quarterly growth for the first time since 2017.”

“Today’s data suggest housing will remain an add in Q3. Starts moderated in July but the 222,000 pace is still solid and just shy of last quarter’s 224,000 average. And some of those Q2 starts will spill over into construction activity this quarter. Board-level releases suggest decent existing home sales in July (national data to be released next week) which will also support residential investment.”

“We still don’t see Canada’s housing sector getting back to its old ways of very strong growth. But a return to the positive column, supported by lower interest rates, is a welcome relief after the sector acted as a drag on growth throughout last year.”