Sharper increase was higher than expected by economists

Canadian housing starts, also known as new home construction, rose 14% in September compared with the previous month — a sharper increase than expected, data from the national housing agency showed on Thursday.

The seasonally adjusted annualized rate of housing starts was 279,234 units, up from a revised 244,543 units in August, the Canada Mortgage and Housing Corporation (CMHC) said.

Economists had expected new builds to rise to 255,000 units.

The six-month trend in housing starts was pushed higher in September, driven by significantly higher monthly starts in Ontario, Quebec and the Prairie provinces, said Tania Bourassa-Ochoa, CMHC’s deputy chief economist, in a news release.

She noted that Montreal and Toronto were responsible for more than 25% of the total monthly starts nationally, mostly thanks to an increase in the construction of new rental apartments.

While these results indicate some resilience, it is worth noting that current housing starts levels are generally reflective of decisions made months or even years ago when investor confidence was higher than it is today, said Bourassa-Ochoa.

The increase came as the annual pace of housing starts for Canadian cities with a population of 10,000 or greater rose to 254,345 in September, up 16% from 219,408 in August.

The annual pace of rural starts was estimated at 24,889.

September new builds starts showed continued resilience despite tough resale conditions, Robert Kavcic, a senior economist with BMO, wrote in a note to clients.

Housing starts are now averaging 256,000 over the last 12 months, a jump from the lows seen earlier in the year, Kavcic noted. However, starts in Ontario have averaged 63,000 over the last 12 months, their lowest in a decade, he added.

“Rentals continue to drive housing starts, with activity in that segment now topping that for homeownership and condos combined.”

CMHC : New Home Construction Up 14% in September from Previous Month by Thomson Reuters | The Canadian Press | RCI