Housing starts in Canada rose for a second consecutive month in June, rising to a higher-than-expected annualized pace of 140,700, the Canada Mortgage and Housing Corp. reported on Thursday.

Economists had forecasted a pace of 130,000 units, following May’s pace of 130,300 units.

The seasonally adjusted annual rate of urban starts increased 9.5% to 120,100 units in June. Urban multiple starts increased 11.3% to 67,000 units, while urban single starts jumped 7.3% to 53,100 units.

“The increase in housing starts in June is broadly based, encompassing both the singles and multiples segments,” said Bob Dugan, chief economist at CMHC.

In the Prairies, urban starts surged 59.4% in June, while British Columbia saw a 25% boost and starts in Ontario increased 3.1%.

Other regions saw declines, including a 6.3% drop in Quebec urban starts, and a 3.9% decline in Atlantic Canada.

Rural starts were estimated at a seasonally adjusted annual rate of 20,600 units in June.

In the second quarter, starts averaged a 129,533 annualized pace, down from the first quarter’s 139,700 average. But the pace of decline in the second quarter slowed to 7.3%, down from the double-digit drops recorded in late 2008 and early 2009, indicating that housing activity in Canada bottomed earlier this year, according to Dawn Desjardins, assistant chief economist at RBC Economics Research.

“The steady pick-up in starts in May and June and firming sales activity point to April marking the cyclical low and we expect to see building activity gradually recover in the second half of 2009,” said Desjardins.

The CMHC expects housing starts to improve throughout 2009 and over the next several years to gradually become more closely aligned to demographic demand, which is currently estimated at about 175,000 units per year.

But economists at TD Economics note that the level of homebuilding activity remains well below 2008 levels. They caution that in the short run, a return to the activity levels reached during the housing boom period is unlikely.

“After entering this downturn following an unprecedented housing boom, both in terms of length and depth, and faced with a higher inventory of unsold units coming out the recession, it remains highly unlikely that housing starts could revisit pre-recession levels for years to come,” said Pascal Gauthier, an economist at TD.