UPDATE 1-Canada Dec housing starts up, beats forecast

Mon Jan 11, 2010 9:48am EST
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* December starts stronger than expected

* Both single-family homes and multiples up (Adds details, analysts' quotes)

TORONTO Jan 11 (Reuters) - Canadian housing starts rose 5.9 percent in December, their third consecutive monthly gain, beating forecasts and signaling the housing sector continues to lead the country's economic recovery.

Starts rose to a seasonally adjusted rate of 174,500 units from an upwardly revised 164,800 units in November, Canada Mortgage and Housing Corp said on Monday. The number of starts in December beat economists' consensus view of 160,000.

Both single-family homes and multi-family homes pushed higher, with singles up 6.4 percent to 79,400 and multiples up 6.7 percent to 77,700.

The data will be a sharp positive for fourth-quarter gross domestic product growth, Scotia Capital said in a report.

"This short-term bonanza, however, means that supply is coming back into a tight market that has thus far been characterized by high prices in part due to supply shortages," said Scotia Capital's Derek Holt and Karen Cordes.

The figures reinforced optimism for Canada's housing sector, even after Monday's expected fall in building permits for November. [ID:nN11413438]

"Overall, the uptick in Canadian residential starts underscores the improving response of builders to the dramatic rebound in overall Canadian housing market activity," Ian Pollick, an economics strategist with TD Securities, said in a report.   Continued...