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A construction worker shingles the roof of a new home in a development in Ottawa on July 6, 2015.Sean Kilpatrick/The Canadian Press

Canadian housing starts fell to the lowest level in a year in May on a decline in Toronto apartment and townhouses.

Housing starts fell 9.8 per cent to an annualized 195,613 units, from 216,775 in April, Canada Mortgage & Housing Corp. said Friday from Ottawa. Multiple-unit starts dropped 15 per cent to 124,957 units. Single-detached homes was the only segment to see a slight rise from April, with a 2 per cent gain to 70,655.

Housing has been a key driver of Canada’s economy for a decade as interest rates remain at historically low levels. In Vancouver and Toronto, the country’s biggest markets, prices have soared to record highs, prompting a series of regulations to cool the market. So far, the government has succeeded in slowing the rush, with both cities undergoing a drop in sales amid rising interest rates.

“In May, the national trend in housing starts declined following several months of stability,” Bob Dugan, CMHC’s chief economist, said in a statement. “This reflects a decline in multi-unit urban starts in May that leaves them close to their 10-year average following several months of historically elevated levels.”

Ontario saw a drop of 22 per cent from April to 52,353 units, while starts in British Columbia saw a rise of 3 per cent to 40,892 units. Toronto starts fell 13 per cent, while in Vancouver they climbed 14 per cent.

The drop in housing starts was unexpected, extending the softer run of construction activity to mark the first month below 200,000 units in a year, Priscilla Thiagamoorthy, an analyst at BMO Capital Markets in Toronto, said in a research note.

“Residential construction, which remained firm at the start of the year, has shown signs of slowing with the double whammy of tougher mortgage rules and rising mortgage rates, combined with fewer ready-to-build lots and permit delays,” Thiagamoorthy said.

– With assistance from Chris Middleton.