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A housing project under construction on the UBC campus in Vancouver on April 23, 2019.Jonathan Hayward/The Canadian Press

The pace of housing starts climbed in January from a month earlier on gains in Ontario and Quebec while starts declined in Western Canada, according to Canada Mortgage and Housing Corp.

The federal housing agency said Monday that January saw a seasonally adjusted annual rate of 213,224 units started, up 8.8 per cent from the 195,892 starts in December. Of those, rural starts were estimated at a seasonally adjusted annual rate of 10,817 units.

Gains were concentrated in multifamily buildings such as apartments and condos that saw a 13.2-per-cent increase in starts, while single-detached home starts slipped 2.1 per cent to 55,100 units.

Economists had expected an annualized rate of 205,000 units, according to financial markets data firm Refinitiv.

Construction activity gains reflected regional economic strengths, but analysts noted that weather may have played an outsized role at this time of year.

“Milder-than-normal weather conditions in Central Canada likely boosted construction in Ontario and Quebec while inclement weather probably dragged down activity in B.C. and parts of the Atlantic region,” Toronto-Dominion Bank economist Rishi Sondhi said in a note.

“That said, the nice upside surprise in homebuilding also speaks to supportive fundamentals, including sharply rising home prices, low interest rates, robust population growth, low rental vacancy rates in key markets and programs to incent rental construction.”

Quebec saw a big jump of 41,000 units to 77,000 to reach the second highest level for the province since the 1990s, while Ontario saw gains of 12,400 to what Mr. Sondhi said was a “relatively low” level of 69,500 units. Out west, Alberta saw a drop of 16,900 to 22,700 and B.C. dropped 16,600 to 26,200 units.

Weather variances aside, the market showed strong underpinnings that could lead the Bank of Canada to hold off on a rate cut, Bank of Montreal senior economist Jennifer Lee said in a note.

“Strong immigration and still-low rates continue to support Canadian housing. Despite the usual month-to-month volatility, starts remain solid and a reason why the BoC may be hesitant to cut rates.”

The longer-term trend looked stable, CMHC said, as the six-month moving average of the monthly seasonally adjusted annual rates of housing starts edged down to 210,915 in January compared with 212,212 in December.

Building permit data released by Statistics Canada on Monday showed that more construction is on the way, as the total value of building permits in December rose 7.4 per cent to $8.7-billion from a month earlier.

Analysts had expected an increase of 2.3 per cent, according to Refinitiv.

The data showed similar trends to housing starts, as the value of multifamily permits climbed 15.9 per cent to $2.9-billion in the month, while single-family permits were down 3.2 per cent to $2.2-billion.

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