Financial Update

North American Markets split directions…

· TSX +86.52 pts (Reuters) led by a jump in mining stocks - as investors turned their attention to China's massive stimulus package of 4 trillion yuan to loosen credit conditions, cut taxes and embark on major infrastructure spending.
· DOW -73.27pts New York markets failed to shake lingering fears over the troubled U.S. economy.
· Dollar -.6c to $83.58US.
· Oil +$1.37to $62.41US per barrel. Crude is bought and sold in dollars, and when the dollar falls against foreign currencies, investors often sell the U.S. currency and buy oil.
· Gold +$12.30to $746.50US per ounce

Home construction beats expectations, while prices rise

Jamie Sturgeon, Financial Post

Canada's housing market showed some resiliency through September and October, as national new home prices unexpectedly rose two months ago while the rate of construction on new homes was higher-than-expected in October, a pair of reports said Monday.

Statistics Canada reported that new-home prices rose in September even as the year-over-year increase fell to its slowest pace since 2000.

New home prices gained 0.1% between August and September, StatsCan said. Year-over-year, home prices appreciated 2.1% -- the slowest pace in more than eight years, and down from August's 2.3% rise.

The results were better than expected though, as economists predicted new home prices would decline 0.1% in September, according to the median of 14 responses in a Bloomberg survey.

Meanwhile, construction on new homes remained above 200,000 starts in October, Canada Mortgage Housing Corp. said Monday, defying expectations among most industry watchers calling for a protracted slowdown.

The seasonally adjusted annual rate of housing starts declined 3.1% to 211,800 units in the month, down from 218,600 in September, but still well above the consensus view among economists that predicted between 195,000 and 200,000 new homes annualized.

"This is in stark contrast to the [United States] where over the first nine months of this year, starts are down 29.8% compared to year-ago levels," wrote Paul Ferley, assistant chief economist at Royal Bank of Canada in a morning note to clients.

"Housing starts remained strong in October and are consistent with our new home construction forecast for [the year]," said Bob Dugan, chief economist at the agency.

Single-detached starts in urban areas declined 1.1%, while construction on urban multi-family dwellings such as condominiums and townhouses fell by 6%, CMHC said.

By province, urban starts decreased in British Columbia, the Prairies and Ontario, CMHC said. In contrast, starts leapt 41,300 in Quebec, while builders began construction on 9,600 units in the Atlantic provinces.

Starts on detached urban housing declined in every province except Ontario, where construction increased 10%, the agency said.

It is the second month in a row that CMHC figures have come in widely-better-than expected.
October's numbers are in line with the 212,000 annualized rate the agency forecast for this year.
However, last month's pullback from September may also indicate the country's housing market has begun to downshift toward CMHC's projection of 178,000 starts for 2009, a more constant rate, historically.

"For the first 10 months of 2008, actual starts in rural and urban areas combined were down an estimated 1.6% compared to the same period last year," the agency said.

"The current tight credit conditions are expected to put further downward pressure on new construction through next year," RBC's Mr. Ferley added.

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