Housing starts to drop to 160,000 in 2011: TD Economics

The annual rate of housing starts reached 170,400 in January – 4,000 lower than TD Economics’ estimates – keeping housing starts roughly on par with the rate of 169,000 starts recorded in December 2010.

January’s numbers, according to a report released by TD Economics Feb. 8, confirm that homebuilding is moderating and should continue to do so in 2011.

“Housing starts were 193,000 units in 2010, a level not seen since the market heydays in 2008. Increasing household debt levels and mortgage rate increases suggest that a return to the 2008 high water-mark is not in the cards anytime soon,” the report stated.

TD Economics expects the rate of housing starts to ease to 160,000 during the year, even though Statistics Canada recorded a 3.7% increase in building permits across the country in December 2010.

“Although this suggests that there is new activity in the pipeline, particularly for multi-family units in Ontario, the lag between new permits and actual housing starts can be long especially for large projects,” the report states.

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