1. This site uses cookies. By continuing to use this site, you are agreeing to our use of cookies. Learn More.

The Canadian New Housing Price Index

Discussion in 'Forex Discussions' started by painofhell, Mar 7, 2016.

  1. painofhell

    painofhell Content Contributor

    Jun 24, 2015
    Likes Received:
    What is the Canadian New Housing Price Index?

    The Canadian New Housing Price Index (NHPI) is a monthly data series released by Statistics Canada. In this article i will explain what it means and why it affects The economic, more in a general way. At the end i will give a specific example of how it can affect your trading in the forex market.

    The Canadian New Housing Price Index gauges changes in the realtors’ selling prices of newly built residential houses over time. The NHPI is calculated in a certain way. In which comprehensive specifications pertaining to every house stay the same between two successive periods. Furthermore, contractors’ estimates of the present value of the land, are also collected. All these contractors’ estimates are independently indexed. Then they are presented as the land series. The residual prices, which primarily refer to the present costs of the house structures, are also independently indexed. Those are presented as the house series.

    Housing economists, general public and the universities, utilize the NHPI to track and comprehend relevant trends and events in the construction sector. Furthermore, Statistics Canada itself uses this index. At least some of the major components of this series. They do it in order to calculate the Consumer Price Index. Moreover, the Canadian System of National Accounts utilizes the NHPI data series in order to deflate the value of the national housing stock.

    The Canadian New Housing Price Index series provides an in-depth analysis of changes in values of newly built houses in Canada. The level of geographic details, along with the measure of sensitivity to changes in supply and demand, makes the NHPI series a very important. Especially in the real estate market. Thus, the real estate businesses can compare the changes in values of houses sold in the resale market with the NHPI data. That, in order to determine whether the resale market values are in line with the values of new houses.
    Or whether they are not. Moreover, housing policy analysts, building contractors, manufacturers and suppliers of the building products use this data. Federal government agencies like CMHC are using it. And even insurance companies, municipal and provincial housing agencies find the Canadian New Housing Price Index very useful.

    The Canadian New Housing Price Index – What you need to know as a trader.

    Now you may wonder, why should you care about all of this? The answer is that it affects the market you trade on. Whether you like it or not. If you want to be a better trader you must be familiar with aspects that may cause price changes. You should always be aware and follow the economic calendar. If you don’t do it, even the best trading strategy may fail. On the other hand, when you on top of things, you can always use it to your benefit. So here is a summary of what you should know.

    – The NHPI is release usually around forty days after the reported month ends.
    – This data release measure the change in price of new homes.
    – This is a leading indicator. It reflects the overall market condition and economic state.
    – Increasing house prices attract investors for more activities.
    – An higher than expected release is good for the local currency – the CAD.
    – Lower than forecast numbers are bad for the CAD.

    When checking the figures always relate to the forecast. The previous release is not as important. The forecast reveals what analysts in the market think. The current price of a currency is due to these forecasts. So if they were wrong, you have a good opportunity to take advantage of it.

Share This Page