Housing starts tick higher in October

Canada Mortgage and Housing Corp. says the annual rate of housing starts ticked higher in October as the pace of new construction in the Vancouver region hit a 12-month high.

The housing agency said Wednesday that housing starts for the month came in at a seasonally adjusted annual rate of 222,771 units in October, up from 219,293 units in September.

The annualized pace of urban starts increased by 2.5 per cent in October to 205,935 units, boosted by a 12.5 per cent jump in multiple urban starts to 149,593. Single-detached urban starts fell 17.1 per cent to 56,342 units.

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"Canadian homebuilding activity remains rock solid, backed by demographic support," said BMO Capital Markets senior economist Robert Kavcicin a commentary.

"Note that population growth in the 25-44 age group...is the strongest in 26 years, with international immigration ramped up across much of the country, and interprovincial flows now pouring into B.C. and Ontario," Kavcic said.

In Vancouver, the annual pace of housing starts nearly doubled to 34,850 compared with 18,116 in September. Multi-unit starts soared to 30,384 compared with 12,864, while single-detached starts in Vancouver fell to 4,466 from 5,252.

Slowdown in Toronto

However, Toronto saw the annual rate of housing starts in that city slow to 35,299 compared with 28,049 in September as both the multi-unit and single detached categories moved lower.

The overall increase in home starts comes even as the resale market for homes has been slowing this year compared with the fever pitch in the spring.

"We continue to expect a moderation in starts at the national level over the next year that would be more in keeping with what we are seeing on the resale side," Royal Bank economist Josh Nye wrote in a report.

"The combination of policy changes, including measures set to go into effect in January, and rising interest rates is expected to result in a sustained cooling in existing home sales and less price pressure."

TD economistDina Ignjatovicsaid housing starts are expected to "gradually trend down toward the 190,000 mark over the next year, roughly consistent with demographic demand."

Rural starts were estimated at a seasonally adjusted annual rate of 16,836 units.

The six-month moving average of the monthly seasonally adjusted annual rates of housing starts was 216,770 units in October, up from 215,153 units in September.

The housing start figures came as Statistics Canada reported that building permits rose in September.

It said Canadian municipalities issued $7.9 billion worth of building permits in September as a 1.7 per cent drop in the residential sector was more than offset by a 13.9 per cent increase in the non-residential sector.