Canadian Monthly GDP Growth and US Q2 GDP Growth - July 31, 2013

BCREA ECONOMICS NOW

The Canadian economy grew 0.2 per cent in May, led by retail and wholesale trade and other services industries which expanded by a robust 0.5 per cent. Growth was held back by a significant drop in oil sands output. Given today's data release, our quarterly GDP tracking model is registering second quarter growth of 2.3 per cent, however after accounting for the impact of June flooding in Alberta, growth is more likely to fall into a range of 1 to 1.5 per cent. 

The US economy grew 1.7 per cent in the second quarter of 2013, exceeding expectations of sub-1 per cent growth. While second quarter growth surprised to the upside, first quarter growth was revised significantly lower from 1.8 per cent to 1.1 per cent. That marks the second quarter as the third in a row where real GDP has expanded by less than 2 per cent. We expect that trend to break in the second half of 2013 as the drag from cuts to government spending begins to fade, which could push growth in the US economy above 3 per cent. 

Homebuilder who paid cash incentives to real estate agents gets 14 years

Jul 23, 2013

A  Las Vegas-area homebuilder has been sentenced to 14 years in prison and ordered to pay $4.4 million in restitution for creating a mortgage fraud scheme that provided large cash incentives to buyers, real estate agents and others to sell homes at inflated prices. Prosecutors said lenders lost more than $18 million after most of the 85 homes sold from March 2007 to mid-2009 went into foreclosure.

Paul Wagner, 59, was convicted by a jury in October of one count of conspiracy to commit bank fraud and wire fraud, six counts of bank fraud and three counts of wire fraud, and sentenced this week by U.S. District Judge Miranda M. Du. Source: fbi.gov.

Canadian Retail Sales - July 23, 2013

BCREA ECONOMICS NOW

Canadian Retail Sales - July 23, 2013

Canadian retail sales rose 1.9 per cent in May, following two consecutive months of flat sales. The close to 2% growth marks the largest rate of growth in retail sales since March 2010. 
Given today's data release, second quarter GDP growth is currently tracking in a range of 1 to 1.5 per cent, though there is significant uncertainty around that number due to the impact of flooding in Alberta and other significant economic disruptions in recent months. 

Retail sales in BC once again posted only modest growth, rising 0.4 per cent from April. Sales were unchanged from a year ago. Weak employment growth in the first half of 2013, along with a slowing of consumer credit will likely keep retail sales growth well below long-term averages this year. We do, however, expect sales to pick-up modestly in the second half of the year.

Canadian Consumer Price Inflation - July 19, 2013

BCREA ECONOMICS NOW

Canadian Consumer Price Inflation - July 19, 2013

Canadian inflation rose in June from May's muted 0.7 per cent but remained tame at just 1.2 per cent. The rise in consumer prices was mostly the result of higher transportation costs due to higher gasoline and and motor vehicle prices. Core inflation, which strips out the most volatile components of the CPI, such as food and energy prices, increased 1.3 per cent in June. Consumer prices in BC actually fell 0.5 per cent in the 12 months to June largely as a result of the elimination of the HST. 

Inflation continues to run well below the Bank of Canada's 2 per cent target and we anticipate it will do so for most of this year. That, along with modest growth in the Canadian economy, will keep the Bank of Canada sidelined until 2014. 

Bank of Canada Interest Rate Decision - July 17, 2013

BCREA ECONOMICS NOW

Bank of Canada Interest Rate Decision

New Bank of Canada Governor Stephen Poloz stuck to the status quo this morning in his first interest rate decision, leaving the Bank's overnight target rate at 1 per cent.  The Bank expects growth in the Canadian economy to be "choppy" in the near term owing to unusual temporary factors such as flooding in Alberta, but overall its outlook for economic growth remains largely unchanged from April's projection of 1.8 per cent real GDP growth in 2013 and 2.7 per cent growth next year. The Bank expects inflation to remain subdued in the near term due to persistent excess capacity in the Canadian economy, but still expects inflation will return to its 2 per cent target in mid-2015 as previously forecast. Notably, the Bank's previous recurring statement regarding withdrawal of monetary stimulus has been altered and perhaps softened to "Over time, as the normalization of these [economic] conditions unfolds, a gradual normalization of policy interest rates can be expected."


All in all, not much has changed since the previous Bank of Canada announcement in May. Economic growth, though still not robust, has been marginally better than expected. Inflation continues to trend below 2 per cent and the labour market is adding jobs at a modest pace. Canadian household are still carrying too much debt, but are adding to that debt at a slower rate. Long-term interest rates have risen substantially in recent months, which may have some negative impact on growth, but remain very low in historical terms. Therefore, we continue to forecast no change in the Bank of Canada's target rate until next year.

BCREA Housing Market Update (July 2013)

Canadian Manufacturing Sales - July 16, 2013

BCREA ECONOMICS NOW

Canadian Manufacturing Sales - July 16, 2013

Canadian manufacturing sales rose 0.7 per cent in May, only the second  increase in sales in the past five months. Sales rose in 11 of 21 manufacturing subsectors, with gains driven by higher sales in the chemical manufacturing sector.

In BC, manufacturing sales grew 1.6 per cent on a monthly basis and were 2.9 per cent higher year-over-year.  May's manufacturing sales were led higher by a 16 per cent increase in the primary metal sector while the recovery in the wood products sector took a bit of a break following several consecutive months of large increases. Wood product sales fell 6 per cent from April but remained 34 per cent higher than May 2012. Stronger manufacturing sales in May continues a string of stronger economic data in BC in recent months that hopefully will mark an inflection point for the provincial economy following a year of relative weakness. 

BC Home Sales Continue on Upward Trend

BC Home Sales Continue on Upward Trend

Vancouver, BC – July 16, 2013.  The British Columbia Real Estate Association (BCREA) reports that a total of 7,196 residential sales were recorded by the Multiple Listing Service® (MLS®) in BC in the month of June, up 5.6 per cent from June of 2012. Total sales dollar volume was 11.9 per cent higher at $3.84 billion. The average MLS® residential price in the province was $533,219, up 6 per cent from a year ago.


"BC home sales rose 6.7 per cent from May, on a seasonally adjusted basis, with June being the fourth consecutive month of increasing sales activity,” said Cameron Muir, BCREA Chief Economist. “Since February, home sales across the province have climbed by 23 per cent, on a seasonally adjusted basis,” added Muir.

On a quarterly basis, MLS® residential sales climbed 15 per cent in the second quarter, while the inventory of homes for sale has moved down 5 per cent over the last two quarters, creating improved market conditions in many regions of the province.

Year-to-date, BC residential sales dollar volume was down 8.2 per cent to $18.8 billion, compared to the same period last year. Residential unit sales were down 7.8 per cent to 35,336 units, while the average MLS® residential price was down 0.4 per cent at $531,401.

Canadian Housing Starts - July 9, 2013

BCREA ECONOMICS NOW



Canadian housing starts held steady in June, registering just under 200,000 unit at a seasonally adjusted annual rate (SAAR).  The trend in Canadian new home construction remained relatively unchanged as well, albeit up slightly to 184,500 units SAAR over the past six months.  On a year-over-year basis, housing starts were down 10 per cent. 

New home construction in BC urban centres jumped close to 40 per cent month-over-month in June to a seasonally adjusted annual rate of 29,346 units. On a year-over-year basis, total starts were 13 per cent lower than June 2012. Single-detached starts were 2 per cent lower over last year, while multiples declined 17 per cent. For the first six months of 2013, total BC housing starts are down 17 per cent and are trending at a rate of 23,400 for the year. 

Looking at census metropolitan areas (CMA) in BC, total starts in the Vancouver CMA were 14 per cent lower compared to last year with multiple starts off 17 per cent while single-detached starts were up 1 per cent.  New home construction in the Abbotsford CMA posted a 350 per cent increase in June compared to a fairly weak 2012 due to strong growth in multiples.  Housing starts in the Victoria CMA were down 43 per cent compared with June 2012 as a sharp decline in multiple starts offset a 13 per cent gain in new single family units. Housing starts in the Kelowna CMA were 29 per cent higher year-over-year as a result of strength in both the single family and muliple sector. . 

Canadian Building Permits - July 8, 2013

BCREA ECONOMICS NOW



Canadian building permits rose 4.5 per cent in May to $7.3 billion, the fifth consecutive monthly advance.
The increase was primarily a result of higher construction intentions in the residential sector in Ontario and the non-residential sector in Quebec.

Following posting the largest gain in the country last month, BC building permits declined 15.4 per cent in May to $827 billion.  Residential building permits fell 15.5 per cent on a monthly basis and were off 10 per cent year-over-year. Non-residential construction intentions were also lower, declining 15.3 per cent on a monthly basis and 24.1 per cent year-over-year.

BC's four major census metropolitan areas (CMA) saw falling permit values decline from April. In the Vancouver CMA, permits were 13.5 per cent lower on a monthly basis and 29.1 per cent lower year-over-year. Construction intentions in the Kelowna CMA fell sharply in May from a robust April, but were still 8 per cent higher than May 2012. Similarly, in the Victoria CMA, permits were down considerably from a very strong April, falling close to 72 per cent on a monthly basis and 64.4 per cent year-over-year. Finally, in the Abbotsford-Mission CMA, building permits declined 21.1 per cent month-over-month but were 63.7 per cent higher than May 2012. 

Canadian and US Employment - July 5, 2013

BCREA ECONOMICS NOW



Canadian employment was virtually unchanged in June following a blockbuster month of job growth in May.
Total employment grew 1.4% over the past 12 months and the unemployment rate remained at 7.1 per cent in June. For the first half of 2013, Canadian employment growth averaged 14,000 jobs per month.

Some long overdue good news for the BC labour market in June as employers added close to 9,000 total jobs including a remarkable 21,600 full-time positions.  A decline in part-time work partially offset the total employment gains. The unemployment rate in BC fell 0.4 points to 6.3 per cent.

In the US, firms added 195,000 jobs to payrolls, soundly beating market expectations of a 165,000 gain.  The US unemployment rate held steady at 7.6 per cent. 

Rising Mortgage Rates May be Forcing Home Buyers off the Fence: NAR

BY JANN SWANSON



Jun 27 2013, 11:00AM

The National Association of Realtors® (NAR) said today that rising interest rates may finally be forcing
many hesitant buyers into the market. NAR's Pending Home Sales Index (PHSI) which is based on home purchase contracts, reached the highest in May that it has achieved since late 2006. NAR also announced it was upgrading its price forecast for 2013.

The PHSI increased 6.7 percent to 112.3 in May from April's level of 105.2 (revised down from an original estimate of 106.0.) The May number was 12.1 percent above the PHSI in May 2012 when it was 100.2 The index has been higher than in the corresponding month a year earlier for each of the last 25 months and the May number was the highest for the Index since December 2006 when it was 112.8.

The Index is a forward looking indicator based which has proven to be predictive of home sales. Transactions under contract are generally expected to close within 60 days. An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined.  

NAR's chief economist Lawrence Yun said the recent rising interest rates may be creating a fence-jumping effect. "Even with limited choices, it appears some of the rise in contract signings could be from buyers wanting to take advantage of current affordability conditions before mortgage interest rates move higher," he said.  "This implies a continuation of double-digit price increases from a year earlier, with a strong push from pent-up demand."

Yun said he expected the national median existing-home price to rise more than 10 percent to nearly $195,000 by year end.  This would be the strongest increase since 2005 when the median increased 12.4 percent.

Existing-home sales are projected to increase 8.5 to 9.0 percent, reaching about 5.07 million in 2013, the highest in seven years; it would be slightly above the 5.03 million total recorded in 2007.

The PHSI in the Northeast was unchanged at 92.3 in May but is 14.3 percent above a year ago.  In the Midwest the index jumped 10.2 percent to 115.5 in May and is 22.2 percent higher than May 2012.  Pending home sales in the South rose 2.8 percent to an index of 121.8 in May and are 12.3 percent above a year ago.  The index in the West jumped 16.0 percent in May to 109.7, but with limited inventory is only 1.1 percent above May 2012.