Housing starts up in most regions

Economists had expected an annual pace of 190,000 on a seasonally adjusted basis, according to Thomson Reuters.

CMHC says construction of urban multiple-unit dwellings such as townhouses, condominiums and apartments were the main reason for the increase in most regions, particularly Quebec.

The agency says the moving six-month trend also rose to 199,503 units in September, from 196,465 in August.

The September numbers were the strongest in a year, driven by healthy gains in both multiple-unit and single-family homes, according to Nick Exarhos, an economist at Toronto-based Canadian Imperial Bank of Commerce.

“It was a warm September, but a scorcher for housing starts in Canada,” Exarhos wrote in a note to clients.
Toronto was an exception, with the seasonally adjusted rate dropping to 30,232 units from 40,406 units in August – mainly as a result of fewer apartment starts.

Canada’s most populous city helped pull down Ontario’s overall activity to 67,426 housing starts in September, from 70,262 units in August.

Quebec saw the largest gain in housing starts last month, due to the development of new rental apartments for seniors. There were also increases in British Columbia, the Prairies and Atlantic Canada.

However, Diana Petramala, economist at Toronto-based Toronto-Dominion Bank, says she expects the pace of housing construction to ease through the rest of the year.

“For one, the new mortgage and tax regulation introduced by the federal government last week is likely to shave up to 10% off home sales over the remainder of the year, and homebuilding activity will likely follow suit,” she says.

“From a regional perspective, most markets are likely to see a moderation in construction activity. In addition, the normalization in housing activity in Vancouver is likely to temper new home construction in the city,” adds Petramala.