Canadian housing starts appear to be embarking on the cooling that economists have been expecting, with November’s figures coming in slightly below forecasts.
The monthly seasonally adjusted annual rate of starts was 196,125 units, Canada Mortgage and Housing Corp. said Monday, down from 203,487 in October. Economists on average had been expecting the figure to be about 200,000.
Canadian Imperial Bank of Commerce economist Emanuella Enenajor said the weakness was broad-based, showing up both in condos and detached homes in Ontario and British Columbia.
Starts of single homes in urban areas fell by 5.4 per cent to 58,606 units, while starts of condos and other properties with multiple units in urban areas fell by 3.2 per cent to 115,717 units.
This marks the third month in a row that starts have fallen. Economists have been expecting new housing construction to lose some steam, but for much of this year its strength defied forecasts.
Urban starts fell in Ontario by 14.3 per cent and in British Columbia by 16.5 per cent. They plunged 45.6 per cent in Atlantic Canada, a phenomenon that CMHC attributes to a decrease in multiunit housing construction in Halifax, following higher than normal activity in October.
Starts were up in Quebec and the Prairies. And Alberta notched a solid gain, bringing starts in that province within a hair of the highest level since early 2008 amid relatively strong housing momentum on the prairies, noted BMO economist Robert Kavcic.
Housing starts are now at their lowest level since November, 2011, and single starts are at their lowest since 2009, National Bank economist Krishen Rangasamy said in a research note, adding that “the tighter mortgage rules and a slow economy are clearly having a negative impact on residential construction.”
Still, housing starts remain “mildly elevated” compared to household formation, Ms. Enenajor said.
“Residential construction is acting as a drag on Canadian growth, but at this point, the landing in the sector still looks soft,” Mr. Kavcic said.