OTTAWA (Reuters) - Canada’s housing market showed some signs of softening in November as new construction starts fell, but separate data showed prices rose in October and permits for future building jumped, suggesting the market could have strength in reserve.
Housing starts fell 4.3 percent to 183,989 units in November from a month earlier as construction of multiple-unit buildings in Ontario dropped sharply, offsetting strong growth in British Columbia, the federal housing agency said.
The decline in starts was sharper than analysts had expected but a separate report showed the value of building permits jumped 8.7 percent in October, suggesting housing starts could bounce back in the coming months.
New home prices also continued to rise in October as the red-hot Toronto market offset cooling elsewhere, extending the long boom in Canadian house prices even as analysts brace for a slowdown after government moves to rein in mortgage lending.
“Residential activity remains a highly regional story in Canada. You know the short version of it by now — strength in Toronto and Vancouver, but weakness in Alberta,” BMO Capital Markets Senior Economist Robert Kavcic said in a research note.
Canada’s housing boom has been slowing unevenly in recent years. The oil slump has dragged down housing sales and prices in the energy heartland province of Alberta, and Vancouver slowed sharply after the government introduced a 15 percent tax on foreign buyers in August.
But Toronto, the nation’s largest city, has continued to soar despite repeated moves by the federal government and regulators to tighten mortgage lending rules to protect borrowers and banks from risky debt.
The report from the Canada Mortgage and Housing Corp showed housing starts softening after a strong 2015 and early 2016. Construction of multiple units, typically condos, dropped 7.7 percent in November, while single-unit starts were essentially flat.
Separate reports by Statistics Canada showed building permits surged unexpectedly in October, mainly due to plans for increased construction in Alberta ahead of changes to the province’s building code. The 8.7 percent jump in permits was well above economists’ forecast for a decline of 0.7 percent.
Permits rose in every province except Quebec, with Alberta up 40.4 percent. Overall, residential building permits climbed 7.7 percent while non-residential buildings jumped 10.7 percent.
In the same month, new home prices rose 0.4 percent, topping economists’ forecasts for a gain of 0.2 percent. Overall, prices were up in 13 of the survey’s 21 markets.
Additional reporting by Leah Schnurr; Editing by Meredith Mazzilli