Canada December housing starts chilled by winter

Wed Jan 9, 2008 10:51am EST
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By Frank Pingue

TORONTO (Reuters) - Canadian housing starts fell more than expected in December due to harsh winter weather, but 2007 still came in as the second strongest year for starts in almost two decades, Canada Mortgage and Housing Corp said on Wednesday.

Housing starts fell 19.6 percent to a seasonally adjusted annualized rate of 187,500 in December from an upwardly revised 233,300 starts in November.

The result missed the consensus forecast of analysts polled by Reuters for 221,000 starts, and sent the Canadian dollar to its lowest level in three weeks.

"Clearly this was a very weak report, driven by a combination of the unseasonably cold weather in December, the tightening credit conditions, and the new land transfer tax in Toronto," Millan Mulraine, an economics strategist at TD Securities, wrote in a note.

Starting on February 1 home buyers in Toronto, Canada's largest city, will pay the city a new land transfer tax, which some analysts predict will slow demand.

Mulraine expects improved weather conditions in January to help support a rebound in housing starts to kick off 2008 but said starts will moderate this year from 2007 levels.

Urban single-detached homes declined 12.6 percent to 85,600 units in December from 97,900 in November, while urban multiple dwellings fell 33.7 percent to an annual rate of 66,000 units from 99,500.

Rural starts in December were estimated at an annual rate of 35,900 units, unchanged from November.   Continued...