Canadian housing starts rise in July

The more volatile urban multi-unit sector saw starts rise by 13%, while urban single-unit starts fell by 7.8%. Rural starts were flat.

The overall trend of increasing construction of homes is not likely to last much longer, however, said Francis Fong, economist with TD Economics.

“Home sales have begun to moderate since January, owing to a combination of high household indebtedness and the recent implementation of new mortgage lending rules – in turn this should put some of the heat out of the homebuilding activity,” said Fong.

TD Economics expects housing starts to drop to a monthly average of 164,000 in 2010, then back up to 171,000 in 2013.

Robert Kavcic, an economist with BMO Financial Group, agreed that housing starts would eventually slow to keep pace with the overall housing market, but for now the numbers are rising.

“While many indicators have pointed to much softer growth through the summer, Canadian housing starts [are] not one of them [and are] still likely responding to a firm rebound in sales activity in the second half of 2010,” he said. “Going forward, expect underlying household information and current economic concerns to apply some gravitational pull to starts.”

Housing starts rose in July due to an increase in multiple starts in all regions except Quebec. Quebec was also the only region to have July starts fall behind the 12-month average.

The largest gains have been in Ontario and British Columbia, with starts up 42% and 34% year-over-year respectively.

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