TORONTO (Reuters) - Canadian housing starts plunged to their weakest level since 2009 in February, a drop blamed partly on severe winter weather that nonetheless added to fears Canada’s post-recession housing boom will stall this year.
A report from the Canadian Mortgage and Housing Corp (CMHC) showed the seasonally adjusted annualized rate of housing starts fell to 156,276 units last month from a downwardly revised 187,025 in January. That fell short of the 180,000 economists had expected.
January had previously been reported as 187,276 units.
“Any way you slice it, today’s housing starts release was among the weakest prints we have seen in some time. While in part weather-induced, thanks to the harsh February weather in much of Canada, the trend is clearly toward weakness,” Randall Bartlett, senior economist with TD Economic, said in a research note.
Canada’s housing market had boomed in the wake of the financial crisis, spurred by record low borrowing costs that also raised fears an asset bubble could be developing.
But economic growth has been hurt by the recent sharp drop in the price of oil, which has hit Alberta’s housing market particularly hard.
CMHC, Canada’s national housing agency, said the February decrease in starts was broad-based, reflecting declines in eight of ten provinces. The six-month moving average of starts slipped to 182,137 units in February, from 188,761 in January.
TD’s Bartlett noted other recent housing data has shown signs of weakness, including existing home sales.
Still, some economists said the severe winter weather, which included the coldest February on record in Toronto, meant the data should be treated with some skepticism.
A shock rate cut by the Bank of Canada in January, spurred by the oil price drop, was also seen extending support for the housing market.
“We’ll reserve final judgment here until we see some numbers from the spring building season. Yes, the fundamentals are not the greatest,” Scotiabank economists said in a research note. “However, we also don’t want to make too much out of a winter housing starts number.”
February’s decrease included a significant drop in multiple urban starts, which fell to 86,214 units in February from 115,123 in January. This category includes the closely-watched condominium sector.
Single-detached urban starts decreased to 54,508 units in February from 56,827 the previous month.
Editing by Chizu Nomiyama and Nick Zieminski