Canadian housing starts fall sequentially in January, starts likely to be elevated in 2019

Canada’s housing starts dropped in the month of January. On a sequential basis, housing starts fell 2.7 percent to 208k units in the month. Still, the level continued to be elevated and follows a strong December print of 213.6k. On a six month moving average basis, starts rose to 208.1k from 207.2k. The fall in January starts was focused in the single-detached segment, which dropped 10.2 percent to 57k units. Multi-family starts came in flat at about 151k units.

Homebuilding came in lower in seven of 10 provinces. Starts were up in Ontario, Saskatchewan and Alberta. Nevertheless, the level of homebuilding continues to be low in the latter two provinces. Meanwhile, starts fell in B.C. after December’s solid gain. Homebuilding also dropped but stayed solid in Quebec. Starts were lower in every Atlantic Province, paced by a 52 percent month-on-month fall in the volatile. PEI market. Starts in Manitoba dropped to their lowest level since last May.

In spite of falling in January, homebuilding continues to go on at a solid rate, aiding in countering the drag from soft resale activity and providing a marked bright spot for the overall economy. Moreover, strong permit issuance implies that starts will continue to be healthy in the near-term, noted TD Economics in a research report.

The multi-family sector is buoying homebuilding as condo begins to respond to past gain in pre-construction sales. Rental construction is also solid in the midst of low vacancy rates in key markets, stimulated by government programs aimed at adding more affordable stock to the market.

“We look for housing starts to remain elevated this year. However, starts should ease in 2020, as more recent softness in pre-construction sales and an inventory overhang in the Prairies causes homebuilding to pull back”, added TD Economics.

At 16:00 GMT the FxWirePro's Hourly Strength Index of Canadian Dollar was neutral at 7.01982, while the FxWirePro's Hourly Strength Index of US Dollar was neutral at 45.4726 more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex