(Changes day reference in first paragraph to Monday, from Thursday)
By Andrea Hopkins
TORONTO, Nov 9 (Reuters) - Canadian housing starts slipped in October from a strong level in September, suggesting a long-awaited slowdown in homebuilding may have begun, a report from the national housing agency showed on Monday.
The report from the Canadian Mortgage and Housing Corp showed the seasonally adjusted annualized rate of housing starts fell to 198,065 in October from an upwardly revised 231,304 in September. Forecasters had expected 200,000 starts.
The drop in groundbreaking on new homes was led by a decline in multiple units - typically condos - and was spread across all regions except for British Columbia, the report showed.
“After ramping up in late summer, Canadian homebuilding activity took a bit of a breather in October,” Benjamin Reitzes, senior economist at BMO Capital Markets, said in a research note.
“While the pullback in starts suggests that housing might be a bit of drag on GDP growth in Q4, the decline was welcome as it will ease concerns about overbuilding ignited by the big prints in August and September,” he said.
Canada’s housing market has seen a prolonged boom in its two largest markets, Toronto and Vancouver, but demand has slowed in most other markets as a drop in oil prices and other commodities has sideswiped the Canadian economy.
Economists have long predicted a correction in home prices and a slowdown in housing construction, with most expecting a soft landing but some warning the market could crash.
A report from the Organisation for Economic Co-operation and Development (OECD) released on Monday warned that while foreign demand for Canadian housing has been boosted by the weak Canadian dollar, oversupply could mean pain in the months ahead, particularly in Canada’s largest city, Toronto, where condo construction has boomed.
“Newly completed but unoccupied housing units have soared in Toronto, increasing the risk of a sharp market correction,” the OECD said, adding that housing starts are running “at the higher end of demographic requirements.”
The CMHC report showed groundbreaking on new urban homes dropped 16 percent, with multi-unit starts down 22.4 percent and construction of single-detached homes up 1.3 percent.
Starts were down in Ontario, Quebec, the Prairies and Atlantic Canada, but up in British Columbia.
Editing by Bernadette Baum