CAD Neutral After Unexpected Rise in Canada September Existing Home Sales
THE TAKEAWAY: Canada existing home sales unexpectedly rose in September, though year-over-year sales declined sharply > Housing market moderating amid tighter lending conditions > CAD neutral
Canadian existing home sales unexpectedly rose in September from a month ago, though year-over-year sales declined sharply, suggesting that tighter mortgage conditions are helping to moderate the country’s real estate boom. According the Canadian Real Estate Association, home sales rose 2.5 percent in September, the first monthly gain since March, after declining 5.8 percent in August. The consensus forecast of economists surveyed by Bloomberg News had projected a 5.0 percent decline in sales. Meanwhile, actual sales, not seasonally adjusted, declined 15.1 percent in September from a year earlier.
The Canadian government moved in June to tighten conditions for both homebuyers and mortgage lenders in a bid to moderate Canada’s real estate market, after persistent strength seen earlier this year sparked concerns of a possible housing bubble. Although the sharp decline in year-on-year sales indicates that the housing market is moderating, the housing market may be unlikely to cool at a more rapid pace without a major catalyst such as an interest rate hike.
USDCAD 1-minute Chart: October 15, 2012
Chart created using Market Scope – Prepared by Tzu-Wen Chen
In the initial minutes after the release of the housing data, the Canadian dollar rallied against the U.S. dollar. However, the greenback quickly regained its footing against the loonie, and at the time this report was written, the USDCAD was back trading near pre-release levels at C$0.9780.
--- Written by Tzu-Wen Chen, DailyFX Research
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