TORONTO (Reuters) - Canadian housing starts fell more than expected in January, data released on Monday showed, reinforcing the view that the country’s housing market is stabilizing after a recent boom.
Starts slowed to 180,248 units last month at a seasonally adjusted annualized rate, a report from Canada Mortgage and Housing Corp showed, shy of the 184,000 forecast by economists.
In December, starts were a downwardly revised 187,144. They were originally reported as 189,672.
The January figure continues a trend that has seen groundbreakings slow from 187,923 units in 2013 and the breakneck pace of 214,827 starts in 2012, when the housing market was at record highs and the government intervened to tighten mortgage lending rules.
Economists are largely predicting a softer but stable Canadian market this year as mortgage rates edge higher and the economy continues to chug along slowly.
“We anticipate that construction activity will continue to edge lower over the course of the year as the forecast increase in interest rates should restrain demand,” David Tulk, chief Canada macro strategist at TD Securities, wrote in a research note.
“A smaller contribution from the housing market is consistent with the macro theme of domestic fatigue that will leave headline (economic) growth at or below its trend rate until net exports are able find their footing both in response to a weaker currency and a fundamentally stronger U.S. economy,” Tulk added.
Multiple urban starts - typically condos - fell 6.0 percent to 102,289 units in January, while single detached starts rose 3.4 percent to 60,869 units, a modest rebound after two months of weakness.
Starts were down in British Columbia, Quebec and the Atlantic region, but rose strongly in Ontario and the Prairies.
RBC economist Josh Nye said unusually bad weather in December and January may have weighed on activity, and that housing starts could stage a small recovery in the next few months. Nye also noted that building permits outpaced starts in the fourth quarter of 2013 - 210,200 permits versus 194,500 starts - which could mean homebuilding will strengthen in the near term.
“However, we expect modestly higher interest rates as 2014 progresses will weigh on housing affordability and lead to some moderation in residential building activity going forward,” Nye wrote in a research note.
With additional reporting by Leah Schnurr; Editing by W Simon; and Peter Galloway