Canadian housing starts increased to 248,100 in June

Canadian housing starts in June jumped 28 per cent to 248,100 annualized units, the fastest pace of home construction in almost a decade, BMO Capital Markets says.

The Canada Mortgage and Housing Corporation said in a release that housing starts jumped by more than a quarter during the month, and BMO notedthat multi-family units the portion of the numbers that include condominiums drove the increase, particularly in Eastern Canada.

Ontario's starts almost doubled, Quebec's starts jumped by 50 per cent and Atlantic Canada's starts jumped by about two-thirds, according to Scotiabank Economics.

B.C., on the other hand, saw a decline of 6,000 to 34,000 according to TD Economics.

Condo starts in Toronto reached a 30-year high for the month, which was a "surprise on the upside," said Omar Abdelrahman, a TD economist. Including all forms of housing, Toronto starts were up 138 per cent largely spurred by the condo segment.

The demand for condosthe "seemingly last affordable option" is driven by millenials, migrants and baby boomers looking to downsize, said Priscilla Thiagamoorthy, an economist with BMO capital markets.

"The national inventory of newly completed and unabsorbed multi-unit dwellings has remained below its 10-year historical average so far in 2018," said Bob Dugan, Canada Mortgage and Housing Corporation's chief economist in a release.

In other words, the demand for affordable housing wasstrong in June especially in expensive urban markets like Toronto and doesn'tseem to be slowing.

Building permits value on the rise

In a separate report, Statistics Canada said Tuesday the value of building permits issued by Canadian municipalities increased 4.7 per cent to $8.2 billion in May.

Much like housing starts, building permits are considered a leading indicator for the economy because they hint at activity and investment to come down the line.