Housing starts begin the year with a bangFriday, February 08, 2008
Housing starts in Canada jumped in January, yet another sign that the Canadian market continues strong while the U.S. market melts down.
Housing starts rose to 222,700 on a seasonally adjusted and annual basis, Canada Mortgage and Housing Corp. said Friday, up from 184,700 in December and more than economists had forecast.
“Historically low mortgage rates, solid employment and income growth, as well as a high level of consumer confidence, continue to underpin the high level of housing starts,” said Bob Dugan, chief economist at CMHC's Market Analysis Centre, adding that January's starts rebounded to a level more consistent with 2008 expectations of 211,700.
That would mark the seventh consecutive year of starts above 200,000.
Ted Carmichael, chief Canadian economist at JPMorgan Chase, noted the data shows Canada has avoided the sharp housing slowdown seen in the United States.
Housing starts peaked in the first quarter of 2006 in both countries. Since then, he pointed out, starts in the United States marked a decline of 46 per cent by December, while Canadian starts were off that peak just by about 9 per cent.
CMHC, the national housing agency, noted that urban housing starts, also seasonally adjusted and at an annual rate, surged more than 25 per cent in January to 189,500 from December.
Multiple units soared more than 64 per cent, while singles fell almost 5 per cent.
Construction increased in four of the five regions measured by CMHC — 43.7 per cent in Ontario, 22.4 per cent in Quebec, 19.4 per cent in the prairie provinces and 17.5 per cent in British Columbia. Building declined in the Atlantic region.
Year over year, the actual number of starts in urban and rural areas fell about 11 per cent from January, 2007, the agency said.
“We expect the Canadian housing market to remain in fairly good shape in 2008 and to remain an important source of economic activity in Canada,” economics strategist Millan Mulraine of TD Securities said in a note. “Though we expect it to fall below the blistering pace recorded in 2007. This is on account of the favourable labour market conditions, the continued strong growth in labour income and the expected drop in mortgage rates, as the Bank of Canada continues to lower [its benchmark interest rate].”
© Copyright The Globe and Mail