Canada’s housing starts rise strongly in January, homebuilding construction to decelerate in 2017

Canada’s housing market begins 2017 on a strong foot. Homebuilders in Canada broke ground on 207,000 units annualized in January. This continues December’s sharp increase and pushes the six-month moving average by just shy of the 200k unit mark, noted TD Economics.

The gains seen in January were driven by the multi-family sector that rose 4.2 percent after a 14 percent increase in December. In the meantime, single family construction dropped 4.6 percent sequentially, reversing certain gains seen in December.

Region wise, Ontario continued to be the main growth driver. Building starts in the region rose sharply by 25 percent in January. In the Atlantic Provinces, homebuilding also increased in the month whereas the remaining regions saw declines. British Columbia saw the biggest decline, as home starts dropped 33 percent from the previous month.

In all, housing starts have been staying around the 200,000 mark annualized in the last six quarters, just slightly above the current pace of household formation. But, homebuilding construction might start to decelerate through 2017, in line with an easing overall housing market activity.

But, the recent strength in multi-unit projects might have additional room to run given the sharp increase in building permit approvals seen in the second half of 2016, stated TD Economics. This might be partially countered by single-family construction that is already at comparatively lofty levels.

“The regional story will continue to reverberate across the housing markets, with central Canada leading the way, while B.C. and the oil-rich provinces lagging behind”, added TD Economics.

At 5:00 GMT the FxWirePro's Hourly Strength Index of Canadian Dollar was neutral at -39.1572, while the FxWirePro's Hourly Strength Index of US Dollar was slightly bullish at 58.8243. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex