A survey was released Tuesday that says Canadian consumer confidence is at its lowest level since September 2001. On Wednesday, a senior market analyst stated in a news release that home buyers are feeling confident, because of "very low interest rates."

The Canadian Real Estate Association (CREA) says that the number of new residential listings on the MLS rose by 4.1 per cent in August, to their highest monthly level since October 1990, when the housing market was in the tank. Yet, more houses sold through the MLS in August than in any other month in history.

What's going on? We hear talk of rising interest rates, energy prices going through the roof, and consumer confidence being shattered by the after-effects of Hurricane Katrina -- and yet, houses are selling at a record pace. Where's it all headed?

"We see evidence of a slowdown in housing," Sherry Cooper, executive vice-president of BMO Financial Group , told a meeting of commercial Realtors in Toronto last week. "It's not a collapse; we're not going to see 1989 (when sales and prices dropped sharply across the country)."

Interest rates will continue to rise during the next year or so, says Cooper, but they will remain lower than in the United States.

Rising interest rates may be encouraging people to jump into the market now to take advantage of the still-low rates. CREA is forecasting that "sales activity will gradually edge lower as interest rates creep higher next year. Even so, transactions through MLS are forecast to reach their third-highest level on record in 2006, declining just 2.2 per cent compared to 2004," says Gregory Klump, CREA's chief economist.

Canada Mortgage and Housing Corp. (CMHC), predicts that for the rest of this year and into 2006, rising interest rates and higher prices will push up mortgage carrying costs and cause the market to "ease gradually." Prices will stay strong, however. The federal housing agency's latest forecast says, "Strong sales in 2005 will continue to foster sellers' market conditions, (and) as a result, the rate of increase in existing home prices will moderate only slightly to nine per cent. However, in 2006, the existing home market is expected to become more balanced, causing price growth to slow to 4.9 per cent."

Phil Soper, president of Royal LePage Real Estate Services, said in a statement on Monday that markets in Toronto, Montreal and Vancouver are seeing a softening in prices because of the increasing supply of inventory. In the third quarter of the year, "this was most evident in Toronto's condominium market, where the availability of a high number of new units has begun to temper price gains," he says.

"Despite sustained growth in housing values across the country, there is little evidence of an economic bubble in any of our major cities," says Soper. "What is remarkable is the length of time that this expansion has covered, over five years, rather than the size of the year-over-year price increases." Soper says the increases have been supported by "sound economic fundamentals, including high consumer confidence, personal income growth, and low unemployment."

That brings us back to the survey by Decima Research Inc. , conducted for Investors Group. The survey says that in the first release of its consumer confidence index since Katrina struck, confidence dropped to its lowest level since September 2001.

"These results likely reflect a combination of rising concerns about energy prices, coupled with concerns about the economic impacts caused by Hurricane Katrina," says Bruce Anderson, CEO of Decima Research. "The pattern of results indicates that Canadians seem to feel that the macro economic impacts will be more short term than long term … while these conditions might depress consumption levels, people appear to think that they will be able to get through the rough patch."

But the Toronto Real Estate Board, in reporting that more homes sold in September 2005 than ever before, quotes CMHC senior market analyst Jason Mercer: "Consumers remain very upbeat with regard to the purchase of a home in the resale market. Steady employment growth and very low mortgage rates have kept buyers confident. Borrowing costs near 50-year lows have kept monthly mortgage payments very affordable historically."

The bottom line, according to the analysts: There's no Canadian housing bubble. Sales remain at or near record levels across the country. While mortgage rates are rising, they are still quite low. More houses are coming on the market, which is good news for buyers because it will temper price gains. And consumer confidence, while taking a hit from energy price increases, should bounce back.