TORONTO (Reuters) - Canadian housing starts fell more than expected in December from a month earlier as construction of multiple units, typically condominiums, dropped sharply, the national housing agency reported on Monday.
The Canadian Mortgage and Housing Corp indicated the seasonally adjusted annualized rate of housing starts dropped to 172,965 units in December from an upwardly revised 212,028 units in November. Forecasters expected 200,000 starts.
“Although we’re ending the year on a soft note, housing was one area that surprised to the upside in 2015, with the 194,000 average building pace up around 10,000 from the prior year,” CIBC Capital Markets economist Nick Exarhos said in a research note.
“Furthermore, because of the general acceleration in the second half of 2015, residential investment is still likely to provide a modest catalyst to growth in the next few quarters as new projects are seen through to completion.”
Canada’s national housing market defied predictions for a slowdown in 2015 as strong demand in Toronto and Vancouver, the two largest markets, continued to boost sales and prices, offsetting a decline in much of the rest of the country, particularly the energy-dependent west.
With the broader economy suffering from a drop in the price of oil and other commodities, housing is one of the few remaining bright spots in Canada’s outlook, though some analysts remained concerned about an oversupply of condominiums.
Groundbreaking on multiple units fell to 101,264 from 138,665 in November, while single-detached starts were effectively flat at 57,743 units in December compared with 57,780 units a month earlier.
The data showed wide regional discrepancies, with a big drop in new construction in Ontario, Canada’s most populous province, and the Prairies, where a drop in oil prices hurt Canada’s energy industry. The small market of Atlantic Canada also saw a drop in starts.
Housing starts were up in Quebec and British Columbia, home to the long-booming Vancouver housing market.
For 2015 as a whole, actual housing starts rose to 195,536 units from 189,329 units in 2014, with all of the strength coming from construction of multiple-unit dwellings. Single detached housing starts were lower in 2015.
Reporting by Jeffrey Hodgson and Andrea Hopkins; Editing by Jeffrey Benkoe