OTTAWA (Reuters) - Canadian housing starts surged in September compared with August, surpassing market expectations, data from the national housing agency showed on Tuesday.
The seasonally adjusted annualized rate of housing starts rose to 220,617 units in September from a 184,201 unit rate in August, according to a report from the Canada Mortgage and Housing Corp.
That was well above analysts’ expectations for a slight rise to 190,000 units.
The gains were broadly based, with construction of multiple units - typically condos and rental apartments - up 22.3 percent to 137,803 units, and single-detached urban home starts up 14.5 percent to 64,045 units.
Homebuilding rose in all regions except Ontario, where multiples softened to levels the CMHC said were “more consistent with household formation.”
Canada’s housing market has enjoyed a long expansion but the start of a 15 percent tax on foreign buyers in Vancouver in August has cooled that market, while the largest market, Toronto, continues to boom.
The federal government last week unveiled yet another measure to tighten mortgage lending and dampen foreign investment in the market in a bid to lower the risk of a housing bubble and fears of a U.S.-style market collapse.
Analysts said the building boom should cool soon.
“Permit figures had suggested a healthy outcome was in the cards, but today’s reading outstrips the pace in building intentions by a wide margin, and we would expect to see somewhat of a deceleration in the months ahead,” Nick Exarhos, economist at CIBC Capital Markets, said in a research note.
Surging housing starts in September will boost Canada’s economic growth in the third quarter, helping fuel a bounce back in growth after oil production shutdowns in late spring caused the economy to shrink in the second quarter.
Reporting by Andrea Hopkins; Editing by Chizu Nomiyama and W Simon