Economic data good – except for new homes
The economic picture is suddenly a lot more brighter after a few years of serious struggle.
Canada's inflation rate has fallen to its lowest level in more than three years. Interest rates have dropped three times since the spring to 4.25% and are trending toward more reductions, helping to ease the stress of borrowing costs for homebuyers and mortgage renewals. And in two weeks' time, the minimum wage in Ontario is increasing.
However, one number that needs improvement in the province is getting more shovels in the ground to build more homes.
On Tuesday, Statistics Canada published its consumer price index, showing inflation across the country slowed to 2% in August, down from 2.5% in July and the lowest since February 2021. In Ontario, the inflation rate was measured at 2.1%.
Lower gasoline prices was the main factor for the slowdown.
That news will likely lead to another interest rate cut by the Bank of Canada on Oct. 23 as well as future reductions, a mortgage expert says.
“The Bank of Canada's longawaited goal has been achieved, with inflation falling to its target of 2%, along with significant decreases in the core measures,” Penelope Graham, with ratehub.ca, said in a news release.
“While the central bank's cutting cycle is already well underway, today's reading further strengthens the rationale for additional cuts in the months to come.”
However, home building has been down over the past year in the province, averaging less than 100,000 starts per month since November before rebounding in July with more than 106,000.
More homes need to be built to lower the costs of housing across the country and “restore affordability” in big cities, Canada Mortgage and Housing Corporation chief economist Bob Dugan said.