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Home construction rose 1.3% in April as Canada’s real estate market continued to show signs of recovery
Home construction rose 1.3% in April as Canada’s real estate market continued to show signs of recovery.
Canada Mortgage and Housing Corp. said Monday housing starts rose by a seasonally adjusted annual rate of 201,700 units last month, up from a revised 199,200 units in March. The March number was previously estimated at 197,300 units.
Economists had expected starts to increase by around 205,000 units in April.
“Higher multiple starts were nearly offset by a decline in single starts and rural area starts in April, said Bob Dugan, CMHC’s chief economist. “As a result, total housing starts edged higher in April.”
Urban starts increased by 5.1% to 182,500 units on a seasonally adjusted annual rate in April. Multiple-unit construction was up 27.2% to 98,600, while single units fell 12.7% to 83,900.
In British Columbia, urban construction rose 16.4% and the Prairie region posted a 6.7% gain. Ontario was up 4.5% and Quebec rose 1.1%, while Atlantic Canada declined 3.3%.
“This was only the second time that the pace of housing starts has breached the 200K-units barrier since November 2008,” said Millan Mulraine, senior strategist at TD Securities.
Rural housing starts totalled 19,200 units in April, down from 25,600 the previous month.
“On the whole, the report underscores the strong recovery in Canadian home building activity, and the Canadian housing market more generally, as favourable buying conditions continue to spur housing demand,” Mr. Mulraine said.
“However, in the coming months we expect the pace of activity to moderate as higher interest rates and home prices, and tighter mortgage rules temper demand.”
By Ka Yan Ng – Reuters
Canadian housing starts inched up 1.3% in April, offering further evidence that recovery in the housing sector is a major component of Canada’s economic recovery.
New home construction rose to a seasonally adjusted annualized rate of 201,700 units in the month from a revised 199,200 in March, Canada Mortgage and Housing Corp figures showed on Monday.
The April number, however, came in below the average forecast of analysts, who had called for 205,000 starts. The March number was revised up from an originally reported 197,300 units.
“This was only the second time that the pace of housing starts has breached the 200 K-units barrier since November 2008,” Millan Mulraine, a senior strategist at TD Securities, said in a note.
The Canadian dollar pulled back slightly after the data was released, but at C$1.0236 to the U.S. dollar, or 97.69 U.S. cents, it was still about 2% higher than Friday’s close, surging on the back of a European rescue deal.
The seasonally adjusted annual rate of urban starts rose 5.1% to 182,500 units as a big jump in the volatile multidwelling group offset a retreat in single-family homes.
The multidwelling group, which includes high-rise condos, climbed 27.2% to 98,600 units. Starts in the closely watched single-family component dropped 12.7% to 83,900, breaking an 11-month streak of gains.
Market players continue to forecast that home sales will slow in the second half of the year after a spring burst of activity due to higher interest rates, new mortgage rules and the introduction of harmonized sales tax (HST) regimes in Ontario and British Columbia.
“While we are looking for further improvement in home construction across Canada through the spring months, we are more uncertain about the late summer, early fall as demand starts to retrench in the new home market in reaction to the introduction of the HST and higher borrowing costs,” Scotia Capital economists Derek Holt and Karen Cordes Woods said in a commentary.
Housing starts went up in most parts of the country in April, led by British Columbia, up 16.4%. Starts were up 6.7% in the Prairie region, 4.5% in Ontario, and 1.1% in Quebec. Urban starts fell 3.3% in the Atlantic provinces.
Rural starts in April were estimated at an annual rate of 19,200.