Sign of housing slowdown? Spending down on renos, new furniture
Late winter is a time many a homeowner associate with renovations. The long stretch between the holidays and the warmer spring weather makes for ideal home improvement time.
And for those looking to list their property in the all-important spring market—the busiest period for home sales—the weeks between January and March are key to making fixes to improve the selling price.
It was odd then to see Statistics Canada say Wednesday retail sales of home building materials slipped in February.
Combined with other declines seen in the February numbers, experts say the dip likely reflects a softening in the housing market, which after years of booming property values is moving toward a so-called soft landing.
“It’s a signal of that,” Connor McDonald, an economist at TD Economics said.
Outdoor reno projects and new home construction were still suffering in February, experts say. But furniture sales are also down.
“Building materials and furniture sales dipping a little bit is coming from slower housing sales and starts. Renovation spending is a factor in there, too,” McDonald said.
It was the fifth month in six that building supplies saw retail sales tumble while furniture retailers look to be on a similar trajectory.
“Things are cooling down just a little bit, and that’s why we’re seeing this dip in associated housing goods,” the TD economist said.
“Sales have yet to recover back to the trend seen before the weather hit,” experts at Capital Economics said in a note. “With temperatures getting closer to seasonal norms, we estimate that sales increased at a faster pace in March.”
Still, there’s more at play here than just the weather, other experts say, with some cautioning that spending patterns will be challenged to return to their peaks.
“Given the overhang of record household debt levels, we doubt that the consumer can lead the recovery in the next few years,” BMO chief economist Doug Porter said.
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