TORONTO (Reuters) - Housing starts fell less than expected in March, underlining the resilience of the domestic market in contrast to the United States, where the housing sector continues to deteriorate.
Last month, housing starts in Canada dipped just 0.35 percent to a seasonally adjusted annualized 254,700 units, from a downward-revised 255,600 units in February, according to the Canada Mortgage and Housing Corp. February’s housing starts were previously estimated at 256,900 units.
The number of starts in March well exceeded the consensus expectation of analysts for 220,000 units.
“This strength continues to illustrate the dichotomy in the Canadian and U.S. housing markets,” said Scotia Capital economist Karen Cordes in a note for clients.
March’s housing starts were supported by a 1.1 percent jump in the urban multiple-units segment, particularly condominium starts, said Bob Dugan, chief economist at CMHC’s Market Analysis Center.
On the other hand, single-unit starts dropped 2.9 percent from February to March, to 80,500 units.
“This is consistent with our view that the housing market will moderate gradually throughout 2008,” said Dugan.
Still, the sturdy data bodes well for Canada’s economy.
“With this brisk rate of activity in the first three months of the year, the housing sector will provide a boost to Canadian GDP,” said TD Securities economics strategist Millan Mulraine in a note.
“On balance, we expect the Canadian housing sector to remain on a fairly strong footing through 2008, though it must almost surely fall from the current elevated level to bring it to a more sustainable path.”
The seasonally adjusted annual rate of urban starts edged down by 0.4 percent in March to 221,500 units. Rural starts were estimated at 33,200 units last month.
Total Canadian housing starts in the first quarter of 2008 were up 11.3 percent from a year ago, said JP Morgan economist Ted Carmichael, showing a divergence between housing activity in Canada and that of the United States.
According to CMHC, for the first quarter of 2008, actual starts in rural and urban areas combined were up an estimated 12.8 percent compared with the same period last year.
Actual starts in urban areas alone jumped an estimated 15.8 percent in the year to date.
Editing by Bernadette Baum