Canada housing data suggests soft landing so far

By Andrea Hopkins

TORONTO (Reuters) - Canadian housing starts edged higher in March and building permits were weaker than expected in February, reports released on Tuesday showed, offering some reassurance that Canada's housing sector is simply cooling, not crashing.

While housing starts rose for a second straight month, all the strength was in the rural market - urban starts dropped sharply - and a longer-term trend showed construction is continuing to moderate, according to a report from government agency Canada Mortgage and Housing Corp.

Meanwhile, data from Statistics Canada showed the value of Canadian building permits rose a weaker-than-expected 1.7 percent in February as a sharp decline in plans for multi-family housing partially offset strength in other projects.

The reports furnished further evidence of a slowing in Canada's housing market, which was red-hot a year ago but has cooled dramatically since the government tightened mortgage rules in mid 2012 to prevent a U.S.-style real estate bubble.

"So far, so good on the soft landing in Canadian housing," BMO Capital Markets senior economist Robert Kavcic said in a research note, pointing out that starts have receded to just above levels seen two years ago.

"Starts have now bounced back in two straight months since January's deep decline, and the average for all of Q1 sat at a comfortable 177,100. That's ... in line with fundamental demand and probably right about where policymakers would like to see activity."

The seasonally adjusted annualized rate of housing starts was 184,028 units in March, up from 183,207 in February and well above the consensus forecast of analysts in a Reuters poll for 176,500.

But the monthly gain was entirely due to a 24 percent surge in rural starts to the highest level since 2010, a pace one economist said was not sustainable.

The six-month trend level in housing starts was 189,742 in March, continuing a downward slope that began in the middle of 2012, when Canada's robust housing market peaked.

The Conservative federal government tightened mortgage lending rules in July 2012 to cool the sizzling housing sector, its fourth such move in four years. The changes shortened the maximum mortgage length, making it harder for Canadians to take on too much debt to get into the expensive real estate market.

"We look for the level of housing starts to remain around this level for the balance of the year," Mazen Issa, Canada macro strategist at TD Securities, said in a research note.

"Slowing construction will also help limit the risk from an accumulation of inventory when interest rates inevitably move higher. Moreover, at these levels, the pace of construction activity is more in line with demographic fundamentals."

URBAN STARTS DOWN

The rise in the standalone monthly rate of housing starts was fueled by a surge in rural starts. Construction starts fell for urban single-detached houses and edged lower for multiple-unit urban starts, typically condos.

Urban starts fell 2.7 percent in March to 157,217 units, led by a 6.6 percent decline in single-family starts to 60,558 units. Multiple-unit urban starts were relatively unchanged at 96,659 units in March, CMHC said.

Separate data showed Canadian building permits rose 1.7 percent in February after a 1.8 percent gain in January. Market players had expected a February gain of 4.3 percent.

Permits for the nonresidential sector jumped 18.9 percent and residential permits fell 7.2 percent.

In line with the softening trend in the housing market since mid-2012, permits for multi-family housing fell 19.1 percent in February, the seventh decrease in eight months, Statscan said.

Permits for single-family houses rose a tepid 1.1 percent. Municipalities approved 14,071 new residential buildings in February, down 12 percent from January.

"Despite the earlier-released upside surprise in March housing starts, today's data confirm that homebuilding activity could continue to struggle in the months ahead, weighing on the overall economy," Emanuella Enenajor, economist at CIBC World Markets, said in a note.

(Additional reporting by Louise Egan in Ottawa; Editing by Janet Guttsman, Chizu Nomiyama and Peter Galloway)

View the original article here

Canada's Ouellet suggests others may be better for pope

OTTAWA (Reuters) - Canadian Cardinal Marc Ouellet, one of the leading candidates to succeed Pope Benedict, suggested in an interview with Canada's national broadcaster that other candidates for pope might do a better job.

"I have to be ready even if I think that probably others could do it better," Ouellet, 68, one of a handful of cardinals seen as papal material, told the Canadian Broadcasting Corp in an interview published late on Sunday.

Ouellet, who now works in the Vatican, served as archbishop of Canada's French speaking province of Quebec from 2002 to 2010, a fractious time where uncompromising positions from the Vatican often ran counter to the widespread secularism in Quebec.

Pope Benedict subsequently named him to the influential position as prefect of the Congregation of Bishops, which recommends the appointment of bishops to the pope.

In a separate interview with the French-language CBC, Ouellet recognized that his name does come up as a possible replacement for Benedict, who stepped down on March 1.

"I can't not think about the possibility. Reasonably, when I go into the conclave of cardinals, I have to say to myself, 'What if, what if...' It makes me reflect, it makes me pray, it makes me somewhat afraid. I am very conscious of the weight of the task," he said.

"So you have to be ready for any outcome, but I think a certain number of people have more chance of being elected than me."

Ouellet said he recognized that the church and the next pope needed to take advantage of social media. Benedict started tweeting in December, as @pontifex. Ouellet said he has been busy, but knows he needs to start tweeting.

Ouellet, who once said becoming pope "would be a nightmare", faced controversy in Quebec in 2010, months before being brought over to the Vatican, when he restated the Church's position that abortion is wrong even in the case of rape.

That remark drew condemnation from Quebec politicians, and one newspaper columnist wrote that he hoped the clergyman would die a long and painful death.

As he left Quebec, he said "the message of truth is not always welcome," but he also asked forgiveness for any harm he may have brought to people.

A Canadian journalist who interviewed Ouellet several times described him as a cross between John Paul II and Benedict, more reserved than the former but more photogenic than the latter. But even his friends say he is not charismatic.

(Reporting by Randall Palmer; Editing by Janet Guttsman; and Peter Galloway)

View the original article here