Housing & Economy

According to Pitchbook Data, firms are looking at mergers and acquisitions to digitize businesses and accelerate growth through revenue and cost synergies.

M&A activity in North America continued on an upward trajectory in Q3, with 4,609 deals closed in the quarter for a combined value of US$708.3 billion. With the economy continuing its recovery as stock prices trend higher and the availability of capital is substantial, dealmakers are moving forward regardless of inflationary pressures in the US and Canada and escalating labor shortages.

A potential headwind for North American firms is the continued appreciation of the US and Canadian dollars against major global currencies. Worries that this trend may be prolonged are on the rise in the face of a combination of expected rate hikes by the Federal Reserve in 2022 or 2023, economic strength in North America, and a slower recovery in the developing world. A stronger dollar will attract North American buyers to look for targets abroad, but at the same time, it will discourage foreign buyers from looking for North American acquisition targets.

Another potential hurdle is the expanding US antitrust policy. The Federal Trade Commission recently announced the antitrust review will now include the effects a transaction will have on the labor market, cross-market, and the post-transaction impact on private equity and venture capital ownership, according to Fenwick & West, retrieved from Pitchbook Data. This means that even if potential deals do not cause market concentration, they will still be scrutinized for other factors. However, this policy does not seem to have a short-term effect, as companies continue to execute deals without regulator approval. An example of this was when DNA sequencing company, Illumina, closed a US$8 billion vertical acquisition of Grail, a cancer-detection start-up, despite a pending EU Commission investigation and an FTC lawsuit.

Looking ahead, the global M&A trend is expected to continue to grow as key drivers remain intact. Private equity firms will keep transaction activity afloat since they are under pressure to utilize cash and make acquisitions, unlike larger corporations. According to CNN Business' data retrieved from Pitchbook Data, global private equity firms have approximately US$1.5 trillion in highly liquid marketable securities looking to be invested.

National Overview
In December, new home prices for Canada grew (+0.2%) at their slowest pace since June 2020. Nationally, new home prices rose 11.6% year over year in December.

Prices were up in 16 of the 27 census metropolitan areas (CMAs) surveyed, unchanged in 10 and down in 1 from November to December.

Chart 1: New Housing Price Index

Demand in Winnipeg raised new home prices
On a year-over-year basis, Kitchener–Cambridge–Waterloo (+30.7%) led with the greatest increase in new home prices in December, breaking its own year-over-year record set in October 2021. Gains were also observed in Windsor (+22.6%) and Winnipeg (+22.2%).

On a month-over-month basis, Winnipeg (+2.8%) reported the largest increase for new home prices in December. According to the Winnipeg Regional Real Estate Board, new listings were 16% lower in December compared with December 2020. Supply has been unable to replenish fast enough to meet the strong demand coming from buyers.

Monthly new home prices continued to increase in Kitchener–Cambridge–Waterloo (+2.2%) in December. Kitchener–Waterloo Association of Realtors reported that the number of months of inventory in this region reached the lowest on record in December (0.2 months).

Saint John, Fredericton, and Moncton also recorded an increase for the month of December (+1.1%). The Canadian Real Estate Association (CREA) reported that for New Brunswick, the number of months of inventory was 2.2 at the end of December, compared with 3.8 months during the same month in 2020. Active listings dropped 56.6% below their five-year average and were the lowest recorded in more than two decades for the month of December. With the number of sales outpacing new listings available, supply shortages in New Brunswick continued to be a strong driver of price increases of new and resale homes.

Chart 2: New house prices rise at the national level

2021 in review: largest national increase since 1989
Nationally, new home prices were up 10.3% in 2021 compared with 2020 (+2.1%)—the largest annual increase since 1989. Prices for new homes grew at a faster pace from January to June 2021 (+7.1%) compared with the second half of the year (+3.1%).

National housing supply continues to shrink amid an active housing market
As the housing market continued to overheat through 2021, housing supply continued to shrink throughout the year in most of the 27 CMAs surveyed. According to the CREA, months of inventory were at 1.6 at the end of December, significantly lower than the long-term average of more than five months, and the lowest level ever recorded.

Building material prices and availability push home prices up in first half of 2021
In January and February 2021, skyrocketing lumber prices broke records as a result of COVID-19-related supply chain issues. Home building and renovation projects, in addition to increased demand from across the border, led to shortages of this construction material domestically. The effects on new home prices from this were two-fold. In the second quarter of 2021, the cost of building a single-detached house grew by 23.9%, partly as a result of the rise in prices of lumber. Additionally, builders struggling to secure building supplies released fewer lots at the same time, which in turn reduced the available supply of new homes, further pushing up prices.

Kitchener–Cambridge–Waterloo finishes the year as Canada's hottest new home market
June 2021 marked the first month since April 2018 that Ottawa lost its title as the leader in year-over-year gains, having been surpassed by Kitchener–Cambridge–Waterloo. Compared with 2020, new home prices increased 24.5% in 2021 for the region. According to the Kitchener–Waterloo Association of Realtors, home sales in 2021 were at their highest on record for the city, with 7,581 units sold through the Multiple Listing Service (MLS), which represented an 18.3% increase over numbers for 2020, which also broke records.

Rapid price growth in Kitchener–Cambridge–Waterloo's housing market in 2021 can be attributed to its being one of the fastest growing populations in Canada and its desirability to out-of-town buyers from the Greater Toronto Area seeking larger homes and lower prices. Additionally, a strong high-tech sector in the region insulated workers in this field from job loss. Some also saw their expenses reduced due to the COVID-19 pandemic, which helped build savings for a down payment. This strong demand, combined with a shortage of developed land in the area, has allowed for these tight market conditions to occur.

Outlook: New home prices projected to continue rising in the first half 2022
The Bank of Canada has "committed to holding the policy interest rate at the effective lower bound until economic slack is absorbed so that the 2 percent inflation target is sustainably achieved. In the Bank's October projection, this happens sometime in the middle quarters of 2022." As interest rates have yet to move up, it is expected that new home prices will continue to rise in the first half of 2022, and possibly throughout the year, as buyers attempt to secure lower interest mortgages before the Bank of Canada announces rate increases. Since mortgage interest rates are currently at historically low levels and Canadians gathered a record amount of savings during the pandemic, the potentially upcoming rate increases may still not dampen the buoyant housing market in the near future.

The shortage of housing supply will continue to be felt in the housing market as it will take time for the builders to bounce back to a pace that will allow a balanced supply and demand. This will continue to put upward pressure on prices until inventory can be replenished. As well, building construction materials will continue contributing to the rise of new home prices in the short term, as supply chains continue to struggle with backlogs spurred by the COVID-19 pandemic.

Note to readers
In addition to this monthly release, the NHPI has also been integrated into the Residential Property Price Index (see Methodology of the Residential Property Price Index (RPPI)). The RPPI is a quarterly series that measures changes over time in the prices of residential properties for Montréal, Ottawa, Toronto, Calgary, Vancouver and Victoria. An aggregate for these six CMAs is also available. The RPPI provides a price index for all components of the housing real estate market—new and resale—in addition to a breakdown between houses and condominium apartments.

The New Housing Price Index (NHPI) measures changes over time in the selling prices of new residential houses. The prices are those agreed upon between the contractor and the buyer at the time the contract is signed. The detailed specifications for each new house remain the same between two consecutive periods.

The prices collected from builders and included in the index are market selling prices less value-added taxes, such as the federal goods and services tax and the provincial harmonized sales tax.

The survey covers the following dwelling types: new single homes, semi-detached homes and townhomes (row or garden homes). The index is available at the national and provincial levels and for 27 census metropolitan areas (CMAs).

The index is not subject to revision and is not seasonally adjusted.

Products
The article "The resilience and strength of the new housing market during the pandemic" examines the changes in new home prices in Canada for the 27 surveyed CMAs captured in the NHPI. It compares the ranking of cities based on home prices six months into the pandemic (August 2020 compared with February 2020).

The article "Price trends and outlook in key Canadian housing markets" looks at where the housing market was at the onset of the COVID-19 pandemic, sheds light on what has happened since then and explores the challenges of the Canadian market going forward.

The infographic "The impact of COVID-19 on Key Housing Markets," part of the series Statistics Canada—Infographics (Catalogue number11-627-M), is available. It provides an outlook on the housing market before, during and after the onset of the COVID-19 pandemic.

The "New Housing Price Index: Interactive Dashboard," which allows users to visualize statistics on new housing prices, is available.

The "Housing Market Indicators" dashboard, which provides access to key housing market indicators for Canada, by province and by CMA, is also available.

For more information on the topic of housing, visit the Housing Statistics portal.

The video "Producer price indexes" is available on the Statistics Canada Training Institute web page. It provides an introduction to Statistics Canada's Producer Price Indexes—what they are, how they are compiled, and what they are used for.

Statistics Canada launched the Producer Price Indexes Portal as part of a suite of portals for prices and price indexes. It provides users with a single point of access to a wide variety of statistics and measures related to producer prices.

Next release
The New Housing Price Index for January will be released on February 18, 2022.

Contact information
For more information, or to enquire about the concepts, methods or data quality of this release, contact us (toll-free 1-800-263-1136; 514-283-8300; infostats@statcan.gc.ca) or Media Relations (statcan.mediahotline-ligneinfomedias.statcan@statcan.gc.ca).

Industry Intelligence Editor's Note: This press release omits select charts and/or marketing language for editorial clarity. Click here to view the full report.

Retail sales were up 0.7% to $58.1 billion in November. The increase was led by higher sales at gasoline stations (+4.9%), building material and garden equipment and supplies dealers (+3.0%) and food and beverage stores (+1.0%).

Sales increased in 6 of 11 subsectors, representing 63.8% of retail trade.

Core retail sales—which exclude gasoline stations and motor vehicle and parts dealers—increased 0.5%.

In volume terms, retail sales were up 0.2% in November.

In November, severe flooding in British Columbia and the Atlantic provinces damaged infrastructure and led to evacuations in affected regions, resulting in major disruptions to the business operations of retailers across the country. Based on respondent feedback, 21% of retailers were impacted by the floods and evacuations in British Columbia and the Atlantic provinces, with 16% of retailers reporting a disruption in transportation as the most impacted business operation.

Given the rapidly evolving economic situation, Statistics Canada is providing an advance estimate of retail sales, which suggests that sales decreased 2.1% in December. Owing to its early nature, this figure will be revised. This unofficial estimate was calculated based on responses received from 50.6% of companies surveyed. The average final response rate for the survey over the previous 12 months has been 90.0%.

Chart 1: Retail sales increase in November

Higher sales at gasoline stations lead increase in retail sales
Sales at gasoline stations were up 4.9% in November, the strongest pace of growth observed in this subsector in five months. In volume terms, sales were up 3.5%.

Sales at motor vehicle and parts dealers decreased 0.3% in November. Lower sales were observed at other motor vehicle dealers (-4.9%) and used car dealers (-1.3%), which fell for the first time in six months. Sales at new car dealers edged up 0.1% in November.

Core retail sales increase on higher sales at building material and garden equipment and supplies dealers and food and beverage stores
Core retail sales were up 0.5% in November. Leading the increase were higher sales at building material and garden equipment and supplies dealers (+3.0%). While sales in this subsector have increased for four consecutive months, they have not reached the highs recorded in March 2021 and are similar to the level recorded one year prior, in November 2020.

Higher sales were recorded at food and beverage stores (+1.0%) in November 2021. The increase was led by receipts at supermarkets and other grocery stores (+1.6%) and to a lesser extent, beer, wine and liquor stores (+0.4%).

Also contributing to the increase in retail sales was clothing and clothing accessories stores (+3.0%). Higher sales at clothing stores (+3.1%), which were up for the second month in a row, led the gain and more than offset the decline at shoe stores (-0.4%). Sales at jewellery, luggage, and leather goods stores (+5.7%) rose after decreasing in October.

Sporting goods, hobby, book and music stores (-10.0%) posted the largest decline in retail sales. The decline followed strong growth in October when higher sales of sporting and leisure products were recorded.

Chart 2: Sales increase in 6 of 11 subsectors in November

Sales up in seven provinces
Retail sales were up in seven provinces in November, led by higher sales in Quebec (+1.2%). In the census metropolitan area of Montréal, sales were up 0.9%.

On the heels of strong growth in October (+2.4%), retail sales in Ontario were up 0.5% in November. Contributing to this increase were higher sales at gasoline stations, and at building material and garden equipment and supplies dealers.

Sales in British Columbia were up 0.8% in November amid flooding and landslides that impacted the province. Leading the increase were higher sales at gasoline stations and at food and beverage stores.

Retail e-commerce in Canada
On a seasonally adjusted basis, retail e-commerce sales fell 3.5% in November.

On an unadjusted basis, retail e-commerce sales were up 1.1% year over year to $4.3 billion in November, accounting for 6.9% of total retail trade. The share of e-commerce sales out of total retail sales fell 0.4 percentage points compared with November 2020, coinciding with limited Cyber Monday sales at retailers amid supply chain constraints in November 2021.

Note to readers
All data in this release are seasonally adjusted and expressed in current dollars, unless otherwise noted.

Seasonally adjusted data are data that have been modified to eliminate the effect of seasonal and calendar influences to allow for more meaningful comparisons of economic conditions from period to period. For more information on seasonal adjustment, see Seasonally adjusted data – Frequently asked questions.

The percentage change for the advance estimate of retail sales is calculated using seasonally adjusted data and is expressed in current dollars.

This early indicator is a special product being provided in the context of the COVID-19 pandemic to offer Canadians timely information on the retail sector. The data sources and methodology used are exactly the same as those outlined on the Monthly Retail Trade Survey information page.

Trend-cycle estimates are included in selected charts as a complement to the seasonally adjusted series. These data represent a smoothed version of the seasonally adjusted time series and provide information on longer-term movements, including changes in direction underlying the series. For information on trend-cycle data, see Trend-cycle estimates – Frequently asked questions.

Both seasonally adjusted data and trend-cycle estimates are subject to revision as additional observations become available. These revisions could be extensive and could even lead to a reversal of movement, especially for the reference months near the end of the series or during periods of economic disruption.

Seasonally adjusted estimates for cannabis store retailers are presented in unadjusted form since there is no seasonal pattern established by official statistics yet. Establishing such a pattern requires several months of observed data. In the interim, the seasonally adjusted estimates for cannabis store retailers will be identical to the unadjusted figures.

Statistics Canada's retail e-commerce figures include the electronic sales of two distinct types of retailers. The first type does not have a storefront. These businesses are commonly referred to as pure-play Internet retailers and are classified under the North American Industry Classification System (NAICS) code 45411—electronic shopping and mail-order houses. The second type has a storefront and is commonly referred to as a brick-and-mortar retailer. If the online operations of a brick-and-mortar retailer are separately managed, they, too, are classified under NAICS code 45411.

Some common e-commerce transactions, such as travel and accommodation bookings, ticket purchases, and financial transactions, are not included in Canadian retail sales figures.

For more information on retail e-commerce in Canada, see "Retail E-Commerce in Canada."

Total retail sales expressed in volume terms are calculated by deflating current-dollar values using consumer price indexes.

Find more statistics on retail trade.

Real-time tables
Real-time tables 20-10-0054-01 and 20-10-0079-01 will be updated soon.

Next release
Data on retail trade for December 2021 will be released on February 18, 2022.

Contact information
For more information, or to enquire about the concepts, methods or data quality of this release, contact us (toll-free 1-800-263-1136; 514-283-8300; infostats@statcan.gc.ca) or Media Relations (statcan.mediahotline-ligneinfomedias.statcan@statcan.gc.ca).

Industry Intelligence Editor's Note: This press release omits select charts and/or marketing language for editorial clarity. Click here to view the full report.

• Impact of inflation on retirement finances now one of Canadians' top concerns
• RRSPs rebound, as financial priorities shift to longer-term saving and investing
• Investors willing to pay fees for opportunity to gain higher returns

With inflation reaching the highest levels in the past 30 years, Canadians trying to refocus on their financial future now face a new uncertainty: the effects of rising inflation on their retirement savings. According to RBC's annual Financial Independence in Retirement Poll, inflation has now moved into the top three concerns Canadians have about retirement for the first time in more than a decade.

Inflation is also limiting the ability of Canadians to increase any savings, as it continues to drive up the costs of fixed expenses – a key savings barrier referenced by 29% of poll respondents, with the largest number of these (40%) being aged 25 to 34. A majority (85%) of this younger age group also worries the most about trying to balance saving for today versus saving for their future.

There is a key difference across all age groups, however, despite the uncertainties posed by the pandemic and rising inflation. Today, almost half (48%) of Canadians have a financial plan and the majority (86%) of those say they are feeling positive about their financial future because of that plan.

"The unexpected has changed lives over the past two years, but if you have a plan, it's easier to adapt to those changes," says Stuart Gray, Director – Financial Planning Centre of Expertise, RBC. "A plan helps you keep on top of your finances, so you know what adjustments you can make for changing circumstances while saving for today and investing for the future."

One strong indicator that Canadians want to refocus on their financial future: RRSPs are making a big comeback. After seven years of trending downward – and last year's historic low of 46% – RRSPs have rebounded and now over half (53%) of Canadians have RRSPs in place to save and invest for their retirement. Also, within those RRSPs, more Canadians are holding mutual funds (36% vs. 30% last year), stocks (20% vs. 14%) and ETFs (11% vs. 7%).

Another future-focused indication in poll findings: the percentage of Canadians who are building their investment portfolios has risen to 28% from 25% last year (and 10 points higher than a decade ago). Of particular note, younger investors aged 25 to 34 are also expressing the most interest in building these portfolios (32%). Since the onset of the pandemic, these younger investors are also focusing more attention on the value of their investments (22%) and almost half (48%) indicate they are willing to pay fees if this offers the opportunity to gain higher returns on those investments.

"When assessing value, investment performance after fees is what really matters. It's encouraging to see that younger Canadians understand how crucial this is in achieving your retirement savings goals and building a strong financial future," adds Gray. "Whenever you want advice, our financial advisors are here to help – in person or through our MyAdvisor digital advice platform, which connects you to an interactive, personalized plan where you can review forward-looking projections and try out different savings scenarios. This makes it easy to see how changes you make to your savings and investments today can impact your finances in the future."

Fast Facts: RBC 2022 Financial Independence in Retirement Poll
Selected findings – National and regional

Fast Facts: RBC 2022 Financial Independence in Retirement Poll
Selected findings – National, gender and age group

About the RBC 2022 Financial Independence in Retirement Poll
A total of 2,000 surveys were completed online by Ipsos among Canadians aged 18+ from October 22 to 30, 2021 using the Ipsos I-Say Panel for this poll, which has been conducted on behalf of RBC for over three decades. Quota sampling and weighting was employed in order to balance demographics and ensure that the sample's composition reflects that of the actual population of Canadians, according to Census data. The precision of online polls is measured using credibility interval. In this case, the results are accurate to within ± 2.5% percentage points, 19 times out of 20, of what the results would have been had the entire population of adults in Canada been surveyed. Credibility intervals will be wider for smaller subsets of the population. Where appropriate, attitudes and opinions are tracked back to previous years' polls.

About RBC
Royal Bank of Canada is a global financial institution with a purpose-driven, principles-led approach to delivering leading performance. Our success comes from the 87,000+ employees who leverage their imaginations and insights to bring our vision, values and strategy to life so we can help our clients thrive and communities prosper. As Canada's biggest bank, and one of the largest in the world based on market capitalization, we have a diversified business model with a focus on innovation and providing exceptional experiences to our 17 million clients in Canada, the U.S. and 27 other countries. Learn more at rbc.com.

We are proud to support a broad range of community initiatives through donations, community investments and employee volunteer activities. See how at rbc.com/community-social-impact.

About RBC and our unique MyAdvisor personalized planning support
We believe that every Canadian deserves a personalized plan. MyAdvisor – a digital advice platform only available at RBC – has now connected over 2.8 million Canadians to their personalized plan and the ability to adjust those plans in real time. MyAdvisor offers a hybrid approach, so you don't have to choose between digital or human – you get both. Along with 24/7 digital access to your plan, cash flow, net worth and goals, you receive insights, real-time visuals and forecasts to help stay on top of your money and reach your goals. MyAdvisor also connects you to the expertise of an RBC advisor in your community, via live video, phone or in-person within a branch. Through interactive scenario planning, you can see the potential future impact of today's money decisions on tomorrow's outcome. Whether you're planning for retirement, saving for your first home, or somewhere in between, we can help.

Media contact
Kathy Bevan, RBC Corporate Communications, 647-618-2287

Freddie Mac Releases Quarterly Forecast

Freddie Mac (OTCQB: FMCC) today predicted that the single-family housing market will remain stable in 2022 even as mortgage rates are expected to increase. A new Quarterly Forecast released by the company’s Chief Economist estimates that rising rates will lead to moderation in homebuyer demand, slowing house price growth somewhat.

“As mortgage rates rise, we do expect some moderation in housing demand, causing house price growth to temper. However, the combination of a large number of entry-level homebuyers facing a shortage of entry-level inventory of homes for sale should keep the housing market competitive,” said Sam Khater, Freddie Mac’s Chief Economist. “In 2022, we expect purchase originations to grow from $1.9 trillion in 2021 to $2.1 trillion in 2022 while refinance activity is anticipated to decrease from $2.7 trillion in 2021 to $1.2 trillion in 2022.”

Specific findings include:

• The average 30-year fixed-rate mortgage (FRM) is expected to be 3.6 percent in 2022 and 3.9 percent in 2023. In 2021, the 30-year FRM averaged 3.0 percent.
• House price growth is expected to be 6.2 percent in 2022, slowing to 2.5 percent in 2023. House price growth was 15.9 percent in 2021.
• Home sales are expected to be 6.9 million in 2022, increasing to 7.0 million in 2023. Home sales were 6.9 million in 2021.
• Home purchase mortgage originations are expected to increase from 1.9 trillion in 2021 to $2.1 trillion in 2022 and $2.2 trillion in 2023.
• Refinance originations are expected to continue to soften, declining from $2.7 trillion in 2021 to $1.2 trillion in 2022 and $930 billion in 2023.
• Overall, annual mortgage origination levels are expected to be $3.3 trillion in 2022 and $3.1 trillion 2023, down from $4.7 trillion in 2021.

Freddie Mac makes home possible for millions of families and individuals by providing mortgage capital to lenders. Since our creation by Congress in 1970, we’ve made housing more accessible and affordable for homebuyers and renters in communities nationwide. We are building a better housing finance system for homebuyers, renters, lenders, investors, and taxpayers. Learn more at FreddieMac.com, Twitter @FreddieMac, and Freddie Mac’s blog FreddieMac.com/blog.

MEDIA CONTACT:
Angela Waugaman
703-714-0644
Angela_Waugaman@FreddieMac.com

A photo accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/639eeaeb-9836-47f0-8dee-08bdb8566a25