OTTAWA (Reuters) - Canadian housing starts declined less than expected in January as groundbreaking increased on single-detached homes in urban areas, while new home prices stalled in December for the first time since April 2015.
The seasonally adjusted annual rate of starts decreased slightly to a still-strong 216,210 in January from December, data from the Canada Mortgage and Housing Corp (CMHC) showed on Thursday.
That was modestly higher than the decline to 210,000 that economists had expected. Canada is coming off a strong year for new construction as housing starts defied expectations of a slowdown in 2017.
While the pace of growth is expected to plateau this year, the six-month trend in starts in January remained near the 10-year high set in December, CMHC said in its report.
“Canadian homebuilding activity (is) still supported by firm demographic trends,” Robert Kavcic, senior economist at BMO Capital Markets, wrote in a research note.
“Builders will likely temper their activity somewhat this year after a heated 2017 campaign ... but we’re still calling for a solid 200,000-plus level of starts for the year.”
Economists are also waiting to see how tighter mortgage rules that came into effect at the start of the year will impact buyers, and how consumers will absorb the three interest rate increases the Bank of Canada has enacted since last July.
Single-detatched starts in urban areas edged up 0.6 percent. In Ontario, starts rose 4.1 percent, including a 6.1 percent in Toronto.
Ontario multiple urban starts, which include condominiums, continued to climb, though multiples pulled back in British Columbia. The major cities of Toronto and Vancouver have both seen strong demand for condominiums.
The CMHC said in a report on Wednesday that hefty rises in house prices in Toronto and Vancouver have not been met by sufficient new supply from builders.
Separate data from Statistics Canada showed new home prices were unchanged in December, with prices flat in Toronto for the sixth time in seven months.
Compared to December 2016, Toronto prices gained 4.7 percent, down from the year-over-year peak of 9.9 percent in April 2017, when the provincial government announced measures including a foreign buyers tax to cool the market in the city and surrounding areas.
The new housing price index excludes apartments and condominiums.
Additional reporting by David Ljunggren, Editing by Chizu Nomiyama and David Gregorio
Our Standards: The Thomson Reuters Trust Principles.