Housing starts lower last month

Construction started on fewer multi-unit housing projects and single-family houses in July compared with June, but the pace of residential building remained high by historical standards, CanadaMortgage and Housing Corp. reported Thursday.

CMHC’s seasonally adjusted annualized rate of housing starts— one of the key indicators of residential building activity and future housing supply— dropped to 206,314 units in July, from 246,200 units in June.

Analysts said July’s pullback was bigger than expected but noted that the biggest impact was frommultiple unit projects, which can be volatile over the short term, and remained relatively high by historical standards.

“All told, today’s report matches our expectation that starts will pull back closer to the more fundamentally supported 200kmark in the second half of 2018 as higher interest rates and regulatory changes continue to limit demand,” TD economist Rishi Sondhi wrote in a commentary.

Josh Nye, a senior economist at Royal Bank of Canada, wrote that last month’s pullback “was a bit larger than expected though it would be hard to call July’s housing starts weak.”

He noted that July’s decline was concentrated inmultiunit starts “but that component still came in only slightly below last year’s pace, which was a record high.”

Urbanmultiple-unit projects such as condos and apartments declined by 20.3 per cent from June to 136,231 units in July, while singledetached urban starts decreased by 3.6 per cent month-over-month to 53,862 units.

Rural starts were estimated at a seasonally adjusted annual rate of 16,221 units in July.