Canada house starts drop on Ontario condo slump
* December starts fall 13.5% to 171,500 units
* November starts upwardly revised to 198,200 units
* Ontario starts retrace November gains
* 2010 ends with a 29% rise vs “recession-plagued” 2009
By Ka Yan Ng – Reuters
Canadian housing starts fell by a greater-than-expected 13.5% in December from November, mainly because of a drop in construction of multidwelling buildings, Canada Mortgage and Housing Corp said on Tuesday.
The weakness was concentrated in Ontario, Canada’s most populous province, where starts retraced the leap they made in November, a rise that was largely due to groundbreakings for condominium buildings and other multidwelling projects.
The decline was not entirely surprising given that the issue of building permits has fallen in recent months and as the overall residential construction sector has cooled from the red-hot pace it set in late 2009 and early 2010 as the economy emerged from recession.
“The fact that much of the declines were isolated to the province of Ontario tends to suggest that this may be more of a one-off event as opposed to holding a deeper, darker meaning for the overall economy,” said Stewart Hall, an economist at HSBC Securities.
Analysts also pointed to weather as a factor in Ontario’s drop as snow blanketed much of the province in December.
National housing starts fell to a seasonally adjusted rate of 171,500 units in December. The compares with 198,200 units, in November, revised up from the 187,200 units first reported.
The December starts were well below the 180,000 starts forecast by analysts in a Reuters survey, although the upward revision to November made up for the miss, analysts noted.
Starts of urban area multiples across the country tumbled 20.1% in December to 84,500 units. New construction of closely watched urban single-family homes also fell, down 2.6% to 64,600.
“Looking past the recent volatility, the overriding theme is still one of moderating residential construction activity in Canada,” said Robert Kavcic, an economist at BMO Capital Markets, noting that while housing starts closed out 2010 on a low note, starts were up about 29% from the “recession-plagued” levels of 2009.
Ontario posted the biggest slide in urban starts, down 45.4% following a massive 82.8% leap in November. Atlantic Canada starts fell 9.8%.
However, British Columbia surged 46.8%, with advances also seen in Quebec, up 13.5%, and in the Prairie region, up 0.7%.
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