OTTAWA (Reuters) - Canadian housing starts jumped in March to their highest level in nearly a decade on a sharp rise for multifamily buildings, defying expectations of a slowdown, data showed on Monday.
The seasonally adjusted annual rate of housing starts rose to 253,720 units from February, the Canada Mortgage and Housing Corp said. That topped economists’ forecasts of 215,000. February was revised slightly higher to 214,253 units.
March’s starts were at the highest level since September 2007, CMHC said. Multifamily starts jumped to 164,321 from 126,791, while single-family construction rose to 89,399 from 87,464.
Economists, who had expected housing starts to cool this year, said the strength in the first quarter could lend more support to the economy than anticipated.
“A strong start to 2017 building sets the stage for continued momentum in residential investment, something we hadn’t been counting on when we first outlined our annual forecast,” CIBC Economics economist Nick Exarhos said in a note.
Still, the Bank of Canada is not likely to change its dovish tone when it makes its interest rate decision at its meeting on Wednesday, Exarhos said.
The central bank is widely expected to keep rates at 0.50 percent, where they have been since the bank cut twice in 2015. While some have said low borrowing costs are contributing to the rise in Canadian home prices, Governor Stephen Poloz said recently that low rates were not fueling housing speculation.
The increase in March starts was widespread.
In Vancouver, where prices began to cool last year as the provincial government brought in a tax on foreign buyers, starts jumped to 30,437 from 18,123.
Construction starts in British Columbia as a whole rose to 44,725 from 27,904.
In Toronto, where accelerating prices have prompted some to call the market a bubble, starts climbed to 53,021 from 36,389. Although the increase came from multifamily starts, construction of single-detached homes has been trending higher since the end of last summer, CMHC said. For Ontario, overall starts rose to 88,841 from 83,891.
With low supply seen as one of the factors behind rising prices in Toronto, increased construction could help alleviate worries of a lack of affordability. Federal Finance Minister Bill Morneau and Ontario Finance Minister Charles Sousa are set to meet to discuss the issue.
Reporting by Leah Schnurr; Editing by W Simon and Lisa Von Ahn