TORONTO (Reuters) - Canadian housing starts fell more than expected in July from June but were broadly in line with demographic fundamentals and analysts said housing remained a bright spot in Canada’s otherwise sluggish economy.
The report from the Canadian Mortgage and Housing Corp showed the seasonally adjusted annualized rate of housing starts fell to 193,032 in July from a downwardly revised 202,338 units in June. Forecasters had expected 195,000 starts.
With the six-month trend at 185,586 starts, analysts said homebuilding has settled into a pace that meets demographic demand, seemingly unaffected by the low oil prices and economic drag felt in many other sectors.
“While there are regional weak spots and strong spots, there is hardly a hint of recession in the national housing market figures. Overall Canadian construction activity continues to look very sturdy,” Robert Kavcic, senior economist at BMO Capital Markets, wrote in a research note.
The CMHC report showed a 5.9 percent drop in urban starts, which make up the bulk of construction activity, with multiple starts - typically condos - down 8.2 percent and single-detached home starts down a more modest 0.8 percent.
Regionally, British Columbia showed the only gain in new housing starts, while Ontario, Quebec, the Prairies and Atlantic Canada all showed declines.
Canada’s housing market has experienced strong growth since a brief pause during the 2008-2009 financial crisis, despite repeated forecasts for a slowdown or crash. While there are signs of slowing in some markets, particularly the oil industry heartland of Alberta, key cities like Toronto and Vancouver are still booming.
“The housing market continues to stand out as a pillar of strength for the Canadian economy amid a very low interest rate environment,” David Tulk, chief Canada macro strategist at TD Securities, wrote in a research note.
“With the Bank of Canada expected to remain quite accommodative, we see further momentum in both sales and construction through the second half of the year.”
Additional reporting by Jeffrey Hodgson; Editing by Nick Zieminski