The pace of home construction in Canada slowed last month as builders started work on fewer condominiums and apartments, Canada Mortgage and Housing Corp. says.
Housing starts in August fell to a seasonally adjusted annual rate of 184,700 units — down from 204,500 in July, the agency said Friday.
Economists on average had expected the rate to come in at 200,000 units for August.
However despite the drop, BMO economist Robert Kavcic noted that residential construction is still running at “a healthy clip” with the average for 2011 down only fractionally from the robust pace set in 2010.
“Canadian housing has performed much better than expected this year, no doubt helped by still-low interest rates and firm (but moderating) job growth,” Mr. Kavcic wrote in a note to clients.
“Looking past the dip in August starts, the bigger picture is that Canadian housing remains quite healthy.”
Starts in urban areas dropped 10.2 per cent to 165,800 units — mostly due to fewer multiple-dwelling starts.
Multiple urban starts fell 15.5 per cent to 101,400 units, while urban single starts decreased by 0.3 per cent in August to 64,400 units.
“Housing starts in August were in line with current demographic fundamentals and are consistent with CMHC's recent Housing Market Outlook,” said Mathieu Laberge, CMHC's deputy chief economist.
“Housing starts decreased in all regions, except the Prairies, with the decline being more pronounced in the multiples segment.”
Rural starts were estimated at a seasonally adjusted annual rate of 18,900 units in August, down from 19,900 in July.
The actual number of housing starts of all types in August was 16,464 across the country — down from 17,111 in August 2010.
TD economist Leslie Preston noted that homebuilding had been a key growth driver in the economic recovery,
“We expect the pace of starts to soften in the coming quarters, after a period of overbuilding spurred on by very stimulative interest rates,” The TD economist wrote in a report.
“Still, with interest rates expected to remain low for quite some time, that softening in activity should be gradual.”