Canadian housing starts slow in December

Wed Jan 9, 2013 11:07am EST
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By Andrea Hopkins

TORONTO (Reuters) - Canadian housing starts slowed in December but more gradually than expected as an increase in single-family starts in urban areas softened the sting of a slowdown in multiple-unit and rural ground-breakings, a report on Wednesday said.

Figures published by Canada Mortgage and Housing Corp provided further evidence that Canada's long housing boom had ended, although activity remained robust in the cities of Ontario, the country's most populous province.

Seasonally adjusted, the annual rate of housing starts was 197,976 units in December, down slightly from 201,376 in November but above an average forecast of 195,000 among analysts polled by Reuters.

"Although today's numbers look a bit better than expected, they mark the fourth straight month of slowing in homebuilding activity, suggesting that Canada's once-bustling homebuilding sector is cooling," Emanuella Enenajor, an economist at CIBC World Markets, said in a research note.

The November figure was revised up from the 196,125 units reported previously.

The December numbers capped a strong 2012, with annual starts hitting 215,200, a 11.4 percent increase from 2011 and the third straight annual gain since the recession low in 2009, according to Robert Kavcic, senior economist at BMO Capital Markets.

"However, the year was marked by starkly different performances in the first and second halves — starts surged above 230,000 annualized in the second quarter before falling in five of the last six months of year after stricter mortgage rules weighed on demand," Kavcic said in a research note.

Fearing a bubble after three years of strong growth in sales and prices, the Canadian government tightened rules for mortgage lending as of July 2012, and home sales have begun to slow in many markets.   Continued...

A builder works on the the roof of a new home under construction in the Montreal suburb of Brossard August 10, 2010. REUTERS/Shaun Best