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Home resale prices fall as confidence rises

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Canadian home resale prices ended a 16-month run of increases in September but consumer confidence perked up for a second straight month in November, data showed Wednesday, suggesting moderating conditions in Canada's economic recovery.

 

Home resale prices slid 1.1 percent in September from the month before as all six metropolitan markets surveyed for the Teranet-National Bank Composite House Price Index reported declines for the first time since February of last year.

 

However, prices were up 7.9 percent from a year earlier and in line with recent housing data that suggests a soft landing for the once red-hot sector.

 

“September's drop notwithstanding, we do not think that a significant price correction looms in housing,” said Marc Pinsonneault, a senior economist at National Bank Financial, pointing to balanced market conditions as reflected in recent new-listings-to-sales ratios.

 

Pinsonneault said that a U.S.-style wave of home foreclosures was unlikely because Canadian lenders have been far more conservative about mortgage loans than their U.S. counterparts were.

 

That sentiment was echoed by Finance Minister Jim Flaherty, who said this week he sees no sign of a housing bubble in

Canada.

 

“I think moderation in the real estate market is a good thing. That's why we tightened up some of the rules this year on high ratio mortgages,” Flaherty told reporters in Ottawa Wednesday.

 

CONFIDENCE RISES

 

Other figures Wednesday showed consumer confidence rose for a second straight month in November, suggesting a more hopeful outlook on finances and job creation, the Conference Board of Canada said.

 

The board's consumer confidence index rose 3.9 points to 83.6, ‘sufficient’ to erase declines recorded between July and September, it said.

 

Confidence levels are still not as high as they were early in 2010, however.

 

Other recent data have also indicated that consumer spending is slowly returning to health and Statistics Canada said Tuesday that retail sales rose for a fourth consecutive month in September.

 

The proportion of respondents in the consumer confidence survey who expected their financial situation to improve over the next six months climbed 1.8 percentage points to 24.7 percent in the consumer sentiment index. The share of negative responses fell to 13.2 percent, the lowest level since March, which the board said was encouraging.

 

The board said responses to a question on the current state of personal finances were largely unchanged, while the balance of opinion towards future employment shifted to positive for the first time since July.

 

The survey of consumer confidence was conducted between Nov. 4 and Nov. 14, and the margin of error is plus or minus 2.2 percent.

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