Canadian home construction is on pace for its best year since the 2008-2009 recession, with builders showing no sign of being slowed by rising interest rates or fears of a housing correction.
Work began on an annualized 222,324 homes in July, the third-fastest monthly pace since 2012, the Canadian Mortgage and Housing Corp. reported Wednesday. Starts have averaged about 215,000 in 2017, which puts the industry on track for the most new residential construction since 2007 if the current pace continues.
The data highlight the industry's resilience despite warnings the nation's housing market may be poised to correct, particularly in Toronto where prices surged earlier this year. Builders though continue to put shovels in the ground.
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"We had expected to see some slowing in starts already and for residential construction to become a drag on overall GDP growth before the end of the year, however that area of the economy continues to surprise to the upside," Andrew Grantham, an economist in Toronto at CIBC Capital Markets, said in a note to investors.
A report Wednesday from Statistics Canada showed building permits unexpectedly rose 2.5 per cent in June to the second-highest level on record, mostly on gains in commercial projects. Permits for single-family residences fell 12.5 per cent in June from the previous month, while for multiple-unit residences they increased 12.5 per cent.
For starts, the gain in July was led by a jump in new multiple-unit construction in the country's three largest urban centers: Toronto, Montreal and Vancouver. New multiple-unit construction was up 9 per cent to an annualized 145,543 units in July. New construction of single-detached homes was down 4 per cent in July.
Economists had forecast home starts would fall to an annualized 205,000 during the month, and permits would drop 1.9 per cent.