Hous­ing starts pick up

Trend de­fies dis­ap­point­ing eco­nomic news

Cape Breton Post - - BUSINESS EXTRA - OT­TAWA

“If there’s a re­ces­sion in Canada, no­body told the hous­ing mar­ket.”

Robert Kav­cic, se­nior economist, BMO

The pace of new hous­ing starts picked up in June and came in bet­ter than ex­pected, de­fy­ing a re­cent trend of dis­ap­point­ing eco­nomic news.

Canada Mort­gage and Hous­ing Corp.’s sea­son­ally ad­justed rate of residential con­struc­tion starts rose to 202,818 in June, up from 196,981 units in May.

Econ­o­mists had es­ti­mated there would have been a de­cline in the an­nu­al­ized rate to 190,000, ac­cord­ing to Thom­son Reuters.

“Amidst a string of weak­erthan-ex­pected eco­nomic in­di­ca­tors, hous­ing ac­tiv­ity is prov­ing to be the bright spot in the sec- ond quar­ter of 2015, pro­vid­ing some off­set to what is os­ten­si­bly round­ing out to be an oth­er­wise dis­ap­point­ing eco­nomic back­drop,’’ Royal Bank economist Laura Cooper wrote in a note af­ter CMHC re­leased its re­port Thurs­day.

There has been a string of dis­ap­point­ing eco­nomic news in re­cent weeks in­clud­ing a con­trac­tion of the econ­omy in April lead­ing some econ­o­mists to sug­gest Canada dipped into re- ces­sion in the first half of the year.

Spec­u­la­tion has also in­creased that the Bank of Canada may look to cut its key in­ter­est rate next week when it is ex­pected to trim its eco­nomic out­look for the year in its mon­e­tary pol­icy re­port.

CMHC said Thurs­day the in­crease in starts came as the num­ber of ur­ban mul­ti­ple-unit projects gained 3.7 per cent, while sin­gle-de­tached ur­ban starts gained 2.0 per cent.

Re­gion­ally, the pace of ur­ban starts in­creased in Bri­tish Columbia, Que­bec, the Prairies and At­lantic Canada, while it slowed in On­tario.

Ru­ral starts were es­ti­mated at a sea­son­ally ad­justed an­nual rate of 14,098 units.

“If there’s a re­ces­sion in Canada, no­body told the hous­ing mar­ket,’’ BMO se­nior economist Robert Kav­cic said.

“Even in Al­berta, where the re­sale mar­ket has cor­rected, new con­struc­tion ac­tiv­ity is hold­ing up rea­son­ably well con­sid­er­ing the chal­lenges.’’

Mean­while, Sta­tis­tics Canada said its new hous­ing price in­dex rose 0.2 per cent in May, fol­low­ing a 0.1 per cent in­crease in April, as gains in On­tario and Saskatchewan were off­set in part by a drop in Que­bec.

The com­bined re­gion of Toronto and Oshawa was the big­gest con­trib­u­tor to the in­crease as builders re­ported mar­ket con­di­tions and higher land de­vel­op­ment costs as the pri­mary rea­sons.

Hamil­ton and Saska­toon both recorded 0.4 per cent price in­creases in May.

On a year-over-year ba­sis, the in­dex was up 1.2 per cent in May, up slightly from the 1.1 per cent in­crease in April.

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