TORONTO (Reuters) - Canadian housing starts rose 5.4 percent in October, a slightly weaker number than expected but still on an upward trend and a further sign that the housing sector is a cornerstone of the country’s economic recovery.
Starts rose to a seasonally adjusted annualized rate of 157,300 units, the highest level so far this year, from a downwardly revised 149,300 units in September, Canada Mortgage and Housing Corp said on Monday.
The number of starts in October was slightly below the 158,000 forecast by analysts surveyed by Reuters. The September figure was previously reported as 150,100.
“This was a good report, and it adds to the growing list of indicators that have been pointing to a recovery in the Canadian housing market, though the rebound in residential construction has remained fairly modest,” said Millan Mulraine, economics Strategist at TD Securities.
On a seasonally adjusted annual basis, urban housing starts increased by 5.2 percent to 139,900 in October as a hefty gain in the often volatile count of multiple-unit buildings offset a small decline in single family homes.
New construction of condominium and apartment buildings climbed 13.8 percent to 72,600 units, while urban starts for single family homes fell by 2.7 percent to 67,300 units.
Rural starts were estimated at a seasonally adjusted annual rate of 17,400 units in October.
Regionally, gains in urban starts were led by a 15 percent rise in British Columbia, and a 14.8 percent increase in Ontario. The rate of urban starts decreased by 11.6 percent in Quebec.
Housing has been a rare bright spot as the Canadian economy struggles to emerge from recession. The resale housing market has rebounded strongly this year, helped by low interest rates and mounting consumer confidence, while the pace of new-home starts has been slower.
Sales of existing homes have recovered to prerecession levels. But while ground-breakings for new homes are likely to keep rising, they will be hard pressed to match the 211,056 starts registered in 2008.
Housing starts hit a trough of 117,600 units in April and have since had an unsteady recovery.
“Canadian residential construction activity has rebounded from the depths of recession seen earlier this year,” said Robert Kavcic, an economist at BMO Capital Markets. “While continued demand strength will likely pull starts higher still in the months ahead, a return to prerecession levels is still a long way off.”
Last week, CMHC upwardly revised its forecast for starts next year to 164,900 from its previous forecast of 150,300, citing stronger demand and more favorable economic conditions.
Editing by Peter Galloway