WRAPUP 2-Canada housing data suggests soft landing so far

Tue Apr 9, 2013 11:31am EDT
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By Andrea Hopkins

TORONTO, April 9 (Reuters) - Canadian housing starts edged higher in March and building permits were weaker than expected in February, reports released on Tuesday showed, offering some reassurance that Canada's housing sector is simply cooling, not crashing.

While housing starts rose for a second straight month, all the strength was in the rural market - urban starts dropped sharply - and a longer-term trend showed construction is continuing to moderate, according to a report from government agency Canada Mortgage and Housing Corp.

Meanwhile, data from Statistics Canada showed the value of Canadian building permits rose a weaker-than-expected 1.7 percent in February as a sharp decline in plans for multi-family housing partially offset strength in other projects.

The reports furnished further evidence of a slowing in Canada's housing market, which was red-hot a year ago but has cooled dramatically since the government tightened mortgage rules in mid 2012 to prevent a U.S.-style real estate bubble.

"So far, so good on the soft landing in Canadian housing," BMO Capital Markets senior economist Robert Kavcic said in a research note, pointing out that starts have receded to just above levels seen two years ago.   Continued...