UPDATE 1-Canadian housing starts climb in September

Tue Oct 8, 2013 9:44am EDT
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By Andrea Hopkins

TORONTO Oct 8 (Reuters) - Canadian housing starts rebounded in September as multi-family construction surged, and the unexpectedly strong end to the summer suggested homebuilding will be less of a drag on Canada's economic growth than previously thought.

The seasonally adjusted annualized rate of housing starts was 193,600 units last month, up from an upwardly revised 184,000 in August, data from the Canada Mortgage and Housing Corp showed on Tuesday.

That was well above analysts' expectations for 185,000 starts and recouped August's lost ground. The federal housing agency had initially said there were 180,300 starts in August.

The robust homebuilding in September was once again a story of higher construction of multiple-unit structures, typically condos. Groundbreaking of multiple units were up by 5.9 percent in the month to 113,705 units, while single-family starts rose a more modest 1.4 percent to 63,535 units, CMHC said.

"The result was much stronger than the street's expectations, and with the prior months' figure also revised up slightly, today's release suggest the homebuilding sector did better than expected in the late summer/early fall," CIBC World Markets economist Emanuella Enenajor said in a research note.

Canada's housing market rebounded in the spring and summer after slowing dramatically in late 2012, when the government tightened mortgage lending rules to stave off a U.S.-style housing bubble.

While the renewed strength in home sales and home building have led some economists to believe Canada's real estate market is inflating once again, economists said homebuilding is likely to slow in the months ahead as mortgage rates tick higher.   Continued...