Housing starts slump even as prices rise

Thu Dec 8, 2011 11:43am EST
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By Jeffrey Hodgson

TORONTO (Reuters) - Canadian housing starts slumped last month, hurt by weakness in the condominium sector, in the latest sign that a property boom fueled by low interest rates is under pressure from global economic uncertainty.

But the news was not all negative, with slightly older data showing housing prices were still on the rise in many markets.

Housing starts fell in November to a seasonally adjusted annualized rate of 181,100 units from an upwardly revised 208,800 units a month earlier, Canada Mortgage and Housing Corp said on Thursday.

The number of starts was below the consensus expectation of analysts, who had called for 200,000.

The miss was partly due to a drop in construction of multi-residential buildings such as condominiums. The seasonally adjusted annual rate of multiple starts in urban areas fell 23.3 per cent to 95,300 units.

"While starts dropped to their lowest level since February, the details of this report are hardly troubling. The volatile multiple-unit sector has corrected from a bout of surprising strength earlier in the fall," Doug Porter, deputy chief economist with BMO Capital Markets, said in a note to clients.

"Even so, we do expect homebuilding activity to simmer down somewhat in 2012 amid softer consumer confidence and a recently cooler job market."

Canada avoided the subprime housing boom and collapse seen in the United States, which triggered the global financial crisis, with local markets slumping only briefly.   Continued...

<p>Condominiums are seen under construction in Toronto, July 10, 2011. REUTERS/Mark Blinch</p>