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Canada's new housing market stalled in October as rising interest rates and slower income put buyers off mortgages

In the most expensive centers of Toronto and Vancouver, prices fell 0.1% and were flat, respectively, in October
keys in door
New house prices were unchanged for the third month in a row.

Canada's housing market appears to be under pressure and it's a trend that doesn't look to be lifting any time soon.

New data this week showed that in the country, new house prices were unchanged for the third straight month.

Indeed, in traditionally the most expensive centers of Toronto and Vancouver prices fell 0.1% in October and were flat respectively.

The pace of building new homes has also slowed in both cities.

According to the Canada mortgage and housing corporation, single-family housing starts were down year to date in October this year, compared with the same period in 2017 in both Toronto (down 40.3%) and Vancouver (down 11.9%).

Single-family homes include row, single and semi-detached houses.

On a year-over-year basis, new house prices in the 27 CMAs (census metropolitan areas) surveyed in Alberta and Saskatchewan have fallen or remained flat for four months in a row.

This week, Canada Mortgage Housing Corp also revealed that fewer Canadians opened new mortgages in the second quarter (the three months to June 30) as customers were put off by rising interest rates and slower income growth.

The group said there were 205,000 new mortgages in the second quarter, down 11.9% versus a  year ago.

Watching the trends

One company that keeps an eye on Canadian housing trends is likely to be Atlas Engineered Products Ltd (CVE:AEP), which makes and supplies engineered wood products and roof trusses — the framework that supports a house's roof.

The group is expanding by buying other companies in the sector and consolidating interests, and any slowdown in new homes does not seem to be hampering its overall strategy.

This month it struck a definitive agreement to buy Manitoba-based South Central Building Systems Ltd for $3.4 million.

"With the acquisitions, we've completed to date, Atlas is on track to deliver close to $50 million top-line revenues this year – only one year into its consolidation strategy," said Atlas CEO a Dirk Marit, in its latest press release. "With our focus on efficiencies, productivity, economies-of-scale and buying power optimization we are confident we can deliver on our profitability targets as well."

Shares in the firm have risen around 14% since the beginning of December to $0.39 but are down from around $0.42 at the beginning of November this year.

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