BUSINESS

Canadian housing starts up in January: Canada Mortgage and Housing Corp.

02/09/2015 08:57 EST | Updated 04/11/2015 05:59 EDT
OTTAWA - The annual pace of new housing starts defied expectations and picked up in January as more multiple-unit starts offset a drop in single-detached starts, the Canada Mortgage and Housing Corp. says.

The federal agency said Monday that the seasonally adjusted annual rate increased to 187,276 units in January from 179,637 in December.

Economists had expected the rate to come in at 178,000, according to Thomson Reuters.

The increase came as the rate of new home starts in urban areas rose to 172,322 units in January from 161,940 in December, led by an increase in multi-unit homes including condominiums, townhouses and apartments.

The rate of multiple urban starts increased to 115,008 units in January from 102,384 in December, while single-detached urban starts fell to 57,314 units last month from 59,556 in December.

"The expected slowing in housing starts in energy dependent regions in January failed to materialize, indicating that, at this stage, the commodity price plunge is not yet negatively feeding through to confidence channels and into homebuilding activity," Royal Bank economist Laura Cooper said.

"Weakness also has yet to show up in the labour markets of oil-dependent provinces; however, recent reports indicate that existing home sales fell sharply in these regions in the month and downside risks to the resilience of these housing markets remain."

The Prairies saw the pace of urban housing starts climb to 53,326 in January from 41,192 in December, while Atlantic Canada also saw reported a jump in urban starts to 7,794 from 5,377.

Urban starts in Quebec slipped to 26,819 last month compared with 29,408 in the final month of 2014, while Ontario improved to 59,316 from 56,798.

B.C. saw urban starts drop to 25,067 from 29,165.

Rural starts dropped to an annual rate of 14,954 in January from 17,697.

In its updated outlook for the housing market Monday, the Royal Bank suggested that the drop in oil prices and the surprise interest rate cut by the Bank of Canada as well as other factors will help the housing market.

However, the bank said the gains will not be spread evenly across the country as Ontario, B.C., Manitoba and Quebec are expected to make gains, while Alberta, Saskatchewan and parts of Atlantic Canada face downturns.

"Our revised forecast shows a slight increase of 1.7 per cent in home resales overall in Canada to 489,500 units in 2015, despite notable declines in Alberta (-16 per cent) and, to a lesser extent, Saskatchewan (-9 per cent) and the Atlantic region (-1.0 per cent)," the bank said in its report.

Last week, CMHC said it expects housing starts this year will dip slightly compared with last year, but remain broadly in line with economic and demographic trends.

The federal housing agency predicted housing starts to decline by 1.0 per cent compared with last year under its base-case scenario, while Multiple Listing Service sales were expected stay the same. The MLS average price was forecast to increase by 1.5 per cent.