Canadian housing starts grew unexpectedly strongly in February, again highlighting the contrast with the United States, where the battered housing sector has sparked an economic downturn.
New home construction in Canada rose by 15.4 percent in February to a seasonally adjusted annualised rate of 256,900 units, from 222,700 units in January, Canada Mortgage and Housing Corp said on Monday.
The number of starts, boosted by a strong performance in the condominium sector, topped analyst expectations for 202,000 starts. But the agency still expects the housing market to moderate in the months to come. "Despite this sizable growth in February, we continue to expect that the trend in housing starts will decrease gradually between now and the end of 2008," said CMHC Chief Economist Bob Dugan.
Urban multiple starts jumped 30.3 percent to an annualised rate of 140,700 in February, while urban singles increased by 1.8 percent to an annualised 83,000 units. The seasonally adjusted annual rate of urban starts rose 18.0 percent to 223,700 units from January. In the United States, where the subprime mortgage crisis has taken its toll on the market, January housing starts rose by 0.8 percent, but building permits decreased by 3.0 percent to the lowest rate in more than 16 years. The February housing start figures have yet to be released.
Building permits fell 2.9 percent in Canada in January, and were 3.3 percent below year-ago levels, although Statistics Canada expects building sites to remain busy in the first half of this year.
"Residential construction in Canada continues to escape the storm ravaging the sector south of the border and to provide solid support for our domestic economy," said BMO Capital Markets economist Robert Hogue said in a note to clients.
The latest figures showed that the annual rate of urban starts increased in four of Canada's five regions in February. In British Columbia, construction rose by 45.2 percent, while in Quebec there was an increase of 26.2 percent, followed by a rise of 16.9 percent in the Atlantic region and 16.4 percent in Ontario.
"Let's not get carried away, however. Clearly, the rabid pace of starts seen in February cannot continue," said Pascal Gauthier, from TD Economics. BMO's Hogue said the deterioration in affordability and growing economic uncertainty should slow home building activity in the months ahead. "The shift towards multiunit dwellings also raises the risk of increased volatility in the sector", he added.