* Feb­ru­ary starts rise 6.6%, Jan­u­ary revised up

* Urban starts up; multi-, single-family homes both rise

* Under­ly­ing trend sug­gests activ­ity stabilizing

By Ka Yan Ng – Reuters

Cana­dian hous­ing starts rose a bet­ter than expected 6.6% in Feb­ru­ary from Jan­u­ary, thanks to a jump in con­do­minium con­struc­tion, though ana­lysts warned the strength is unlikely to carry into com­ing months and could be a mild drag on over­all eco­nomic growth.

Hous­ing starts climbed to a sea­son­ally adjusted annu­al­ized rate of 181,900 units in Feb­ru­ary from a revised 170,600 units in Jan­u­ary, Canada Mort­gage and Hous­ing Corp said on Tues­day. Jan­u­ary starts were revised up slightly from 170,400.

Ana­lysts, on aver­age, had fore­cast 173,000 starts in February.

“The details reflected some­what of a lack of breadth, so we dis­count the strength on volatil­ity con­cerns and are not con­vinced this is a sus­tain­able break from a lower trend,” wrote Sco­tia Cap­i­tal econ­o­mists Derek Holt and Gor­ica Djeric.

Urban starts rose by 9.4% to 161,000 units, CMHC said, dri­ven by a 14.5% rise in con­struc­tion of multiple-unit build­ings, mainly con­do­mini­ums, account­ing for 94,900 units.

Ana­lysts said strength in the condo mar­ket may not con­tinue as there has been a recent drop in build­ing per­mits issued for the sector.

The closely watched single-family homes seg­ment edged 3.0% higher to 66,100 units in February.

Despite the month-to-month swings in the volatile multi-unit group, the under­ly­ing trend sug­gests hous­ing starts are aver­ag­ing 176,000 units a month.

“Activ­ity appears to be sta­bi­liz­ing around a level con­sis­tent with demo­graphic demand,” said Robert Kav­cic, econ­o­mist at BMO Cap­i­tal Markets.

Com­pared with global trends in the face of the finan­cial cri­sis, Canada’s hous­ing mar­ket has been resilient, due mainly to a strong bank­ing sys­tem and low inter­est rates. After a brief retreat dur­ing the cri­sis, the res­i­den­tial hous­ing sec­tor was able to post double-digit price gains in late 2009 and early 2010.

But Canada’s eco­nomic recov­ery is now seen depend­ing less on consumer-driven growth and more on busi­ness and export growth. Ana­lysts expect that a rise in inter­est rates later this year and tighter mort­gage rules will com­bine slow the hous­ing sector.

“We con­tinue to expect a soft­en­ing in over­all hous­ing starts, par­tic­u­larly with the antic­i­pated higher inter­est rates and a slower sec­ond half of the year, keep­ing home prices under wraps,” said Krishen Ran­gasamy, an econ­o­mist at CIBC World Markets.

Atlantic Canada saw the biggest decline in urban hous­ing starts in Feb­ru­ary with a 24.7% drop, CMHC said, while Que­bec fol­lowed with a 7.1% fall. British Colum­bia was down 5.9%.

Urban starts increased by 29.3% in Ontario and by 26.1% in the Prairie provinces.

Rural starts were esti­mated at a sea­son­ally adjusted annual rate of 20,900 units in February.

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Con­tact the Jef­frey Team for more infor­ma­tion – 416−388−1960

Lau­rin & Natalie Jef­frey are Toronto Real­tors with Cen­tury 21 Regal Realty.
They did not write these arti­cles, they just repro­duce them here for peo­ple
who are inter­ested in Toronto real estate. They do not work for any builders.
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