Housing starts move up in March, with broad-based upswing: CMHC

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OTTAWA - Housing starts increased by 13.7 per cent in March in a surprise ''broad-based'' upswing, Canada's mortgage and housing regulator said Wednesday, however economists cautioned not to read too much into the rise from a nine-year low in February.
The Canada Mortgage and Housing Corporation said new home construction is now at a more sustainable level after having been exceptionally strong over the past seven years.
The agency reported that seasonally adjusted housing starts rose to 154,700 units in March from 136,100 in February.
However BMO Capital Markets economist Douglas Porter noted that almost all of the gain was in the volatile multiple unit category which was up 28.3 per cent while urban single-family starts rose just 1.3 per cent.
''Home-building reports around this time of year can be as much a weather report as an economic report, and March was generally on the mild side,'' Porter wrote in a note to clients.
''The level of residential building permits sagged to just 124,000 units in February, suggesting activity is likely to fade further.''
''March's level of starts is still down a towering 35 per cent from a year ago,'' Porter said.
CMHC said urban housing starts increased by 35 per cent in Ontario and by 23.3 per cent in Quebec, but declined by 17.3 per cent in British Columbia, by 7.9 per cent in Atlantic Canada, and by 7.5 per cent in the Prairies.
''While the multiples segment experienced the largest increase, the overall boost in starts was broad based, encompassing the singles segment as well,'' said Bob Dugan, chief economist at CMHC's Market Analysis Centre.
The seasonally adjusted annual rate of urban starts increased 17 per cent to 127,900 units in March. Urban multiple starts increased 28.3 per cent to 81,500 units, while urban single starts moved up by 1.3 per cent to 46,400 units in March.
Rural starts were estimated at a seasonally adjusted annual rate of 26,800 units in March.
TD economist Pascal Gauthier suggested that poor weather conditions in Central Canada during the first two months of the year likely added to the usual winter weakness, with milder than usual March weather helping to boost residential construction.
''There is not enough in this monthly March data to believe it breaks the previously entrenched downtrend,'' Gauthier wrote in a note to clients.
''We expect further weakness in the coming quarters, and will be looking for signs of stabilization in homebuilding activity towards the end of the year in sync with the rest of the economy.''

Organizations: Canada Mortgage and Housing Corporation, BMO Capital Markets

Geographic location: Atlantic Canada, OTTAWA, Ontario Quebec British Columbia Central Canada

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