Pace of housing starts pick up in Canada

OTTAWA — The pace of new home construction picked up unexpectedly in February driven by strength in the condo market in major cities, says Canada Mortgage and Housing Corp.

Nationally, the housing corporation said the seasonally adjusted annual rate of housing starts increased to 229,737 units in February, up from 215,260 in January.

Economists had expected the rate to come in at 216,600, according to Thomson Reuters. Housing starts are considered a leading indicator of how the economy is performing.

TD Bank economist Rishi Sondhi said homebuilding continues to defy expectations.

“Starts are being boosted by a relatively firm economic backdrop, healthy population growth and past gains in pre-construction sales in Toronto,” Sondhi wrote in a report.

“However, February’s increase was driven by the volatile multiunit sector, leaving some scope for reversal in March.”

Sondhi noted that while the pace of starts has held up so far this year, TD expects that cooling demand in the face of restrictive policy measures and higher rates will ultimately slow starts going forward.

New mortgage rules this year mean federally regulated lenders must subject homebuyers seeking uninsured mortgages to a stress test to ensure they can continue to make payments even if rates rise.

The overall increase in housing starts for February came as the seasonally adjusted annual rate of urban starts increased by 7.1 per cent in February to 211,211 units. Multiple urban starts increased 15 per cent to 154,535 units while single-detached urban starts fell 9.8 per cent to 56,676 units.