Today's Report (10/18/2021)

The standalone monthly SAAR of housing starts for all areas in Canada was 251,151 units in September, a decrease of 4.4% from 262,754 units in August. The SAAR of urban starts decreased by 4.5% in September to 223,055 units. Multiple urban starts decreased by 4% to 165,861 units in September, while single-detached urban starts decreased by 5.9% to 57,194 units.

The trend in housing starts was 271,068 units in September 2021, down from 284,757 units in August 2021, according to Canada Mortgage and Housing Corporation (CMHC). This trend measure is a six-month moving average of the monthly seasonally adjusted annual rates (SAAR) of housing starts.

What it is

It records the number of new homes being built, in the preceding month. SAAR (seasonally adjusted annual rate). The report will show last month’s data. For example, release comes out in Feb, but will represent data for Jan.

What Are The Fundamental Effects

This is a leading indicator of economic health. A sharp drop-off in home construction is a tale-tale sign that the broad economy is on the verge of slowing, whilst a rebound in housing starts and home buying sets the stage for a pickup in overall business activity.

How Does It Affect The Markets

CURRENCY - A strong housing report is considered bullish for the Canadian Dollar because it usually supports a scenario of higher corporate profits and firming of interest rates. Weak housing data can cause the value of the dollar to slip.

STOCKS - Prolonged weakness in housing starts can alarm stock investors since it acts as a precursor to a broader downturn in the economy. If housing activity is vibrant and inflation remains contained, it can be viewed as a positive sign.

BONDS - A healthy pickup depicts an economy that is robust and where inflation pressures are likely to accelerate. That can knock down bond prices and cause yields to rise.