Ainsworth Lumber Co Ltd ANSBF

RE: Economic Outlook

[PAGODA5]

The home price data comes on the heels of disappointing figures for new home sales. On Friday, the U.S. Census Bureau said sales of new single-family homes plunged a monthly 13.4% in July to a seasonally adjusted annual rate of 394,000. That number came in well below analysts’ expectations and is much lower than the 700,000 typically logged in a healthy market.

“I think there is a risk of a softening housing market,” warned Robert Shiller, Yale economics professor and co-creator of the Case-Shiller home price indexes, on CNBC Tuesday morning. He noted that housing has been a “speculative market” thanks to the prevalence of real estate investors that include Wall Street institutions and house flippers. Last week he warned that rising rates will hurt home prices as the increasing cost of borrowing cuts into buyer demand.