Canadian housing starts fall sequentially in December, homebuilding to fall below 200k mark in 2019

Canada’s housing starts dropped sequentially in December. Starts fell 4.9 percent to 213.4k in the month. However, the level continued to be sound and follows an upwardly revised November print of 224.3k. On a six-month moving average basis, starts dropped to 207k from 212.3k. The fall in December starts was concentrated in multi-family units, which dropped 6.5 percent to 149.8k units. Single-detached starts came in flat, coming in at about 63.7k units.

Homebuilding came in lower in seven of ten provinces. Starts rose in Nova Scotia and Quebec. Starts also rose to their highest level since late 2017 in B.C. Meanwhile, starts saw marked falls in Ontario, Alberta, and Manitoba. Starts stayed low in Saskatchewan while falling in every other Atlantic province, with the sharpest percentage fall occurring in PEI.

Today’s report was a solid report, with a sound rate of starts in December along with an upward revision to November’s already-healthy print. Homebuilding is being buoyed by solid population growth, on-going job gains, and past growth in pre-construction sales.

“We expect homebuilding to glide below the 200k mark in 2019 as higher mortgage rates, tighter lending conditions and strained affordability in key markets weighs on demand. Overbuilt markets in the Prairies and moderating pre-construction sales activity are also factors which should cool the pace of new housing construction moving forward”, said TD Economics in a research report.

At 16:00 GMT the FxWirePro's Hourly Strength Index of Canadian Dollar was neutral at 4.2873, while the FxWirePro's Hourly Strength Index of US Dollar was slightly bearish at -73.3725. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex