Canada housing starts bounce higher in June

Tue Jul 10, 2012 12:16pm EDT
 
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By Andrea Hopkins

TORONTO (Reuters) - Canadian housing starts climbed unexpectedly in June as multiple urban starts in Quebec and British Columbia bounced higher, but homebuilding is still expected to slow as the year progresses, Canada Mortgage and Housing Corp said on Tuesday.

The seasonally adjusted annualized rate of housing starts surged to 222,700 units in June, compared with an upwardly revised rate of 217,400 units in May. The May figure was initially reported as 211,400 units.

The bounce bucked expectations for a slowing in housing construction - analysts in a Reuters poll had expected 205,000 starts in June.

"We thought the data would be above consensus given a clear strengthening in the latest building permits reading, and today's starts print confirmed that homebuilding is showing no signs of cooling off yet," CIBC World Markets economist Emanuella Enenajor said in a research note.

"Today's data suggest homebuilding could be a contributor to growth in the second quarter, and the current low rate environment is continuing to support already elevated housing construction activity, namely in the condo/multi-family segment."

Canada's hot housing market has sparked fears of a bubble, particularly in Toronto, Canada's largest city, where low interest rates have driven a condominium building boom and double-digit annual price increases for existing homes.

Mindful of the U.S. housing boom that was left unchecked until it burst, the Canadian government moved last month to tighten conditions for both homebuyers and mortgage lenders in a bid to deflate a possible bubble before it pops.

Separate data showed the average price of a home in Canada increased between 3.3 and 5.5 percent in the second quarter of 2012 compared to a year earlier, according to the Royal LePage House Price Survey.   Continued...