Canadian housing starts jumped a higher-than-expected 7.3% in September, helped by a surge in the condominium sector, according to CMHC’s latest statistics.
Meanwhile, new home prices rose in August for the fifth straight month, according to Statistics Canada, which said its new home price index edged up 0.1% during the month
Housing starts rose to a seasonally adjusted annualized rate of 205,900 units last month. August starts were revised up to 191,900 from 184,700.
Driving the gains was a jump in construction of multi-residential buildings such as condominiums. The government agency pointed to increased starts of so-called multiples in the Atlantic region, Quebec and British Columbia.
“Multiple housing starts are expected to move back toward levels consistent with demographic fundamentals in the near term,” Mathieu Laberge, a deputy chief economist with CMHC said in a statement.
CMHC said urban starts increased by 8% to 185,900 units in September, with multiple urban starts up by 14.2% to 118,000 units. Single family housing starts in urban areas decreased by 1.5 per cent in September to 67,900 units.
“Multiples continue to diverge from singles and remain the major driver of residential construction in Canada.,” Krishen Rangasamy, senior economist with National Bank Financial Group, wrote in a note. “For now, the Canadian housing market is being buoyed by low interest rates. But all good things eventually come to an end. We are already seeing a slow move in the resale housing market towards “buyers’ market” territory.
Disposable income is flattening out and, if as we expect the labour market also moderates, the housing market should cool further. With multiples running riot, the bulk of the correction, when it comes, should take place in that category. Despite the good headline, a disappointment from today’s report is the drop in singles starts, which contribute more to GDP per unit than multiples. Overall, the contribution of residential construction to Q3 GDP shouldn’t be stellar.”
House prices in August were unchanged in six of the 21 metropolitan regions tracked by StatsCan. Toronto and Oshawa prices rose 0.2% while Vancouver fell 0.4% and Victoria was down 0.3% “as builders recorded lower negotiated selling prices or offered promotional pricing to generate sales,” the agency said.
Year-over-year, new home prices were up 2.3 per cent in August.
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