Canadian housing starts rise in December, growth likely to moderate in near-term

Canadian housing starts rose in December, breaking ground on 207k new housing units in December, up from the 187k starts. This was also ahead of the market expectations of 195k. However, 6-month moving average basis, starts were nearly flat at 198k units.

The growth of housing starts was broad-based, as all major categories saw gains. Multifamily units led the way (+13.9 percent) after declining in the two prior months, while single family construction grew 8.1 percent to reach nearly 67k units, reported TD Economics in its research note.

Ontario led growth higher, as starts rose roughly 21k units on strength in the multifamily sector. The performance was mixed in the other regions of the country, with starts picking up in Quebec but slowing slightly in B.C, they added.

Housing starts are expected to be very volatile, but considering December data it was significant to keep forecast for 2017 around the 200k level that has characterised 2016.

Looking forward, the regional split will remain important. The pace of starts is expected to slow somewhat nationally, as tighter mortgage regulations, and rising mortgage interest rates act as headwinds. However, Ontario is likely to remain supported by pent-up demand for some time, said TD Economics in its research note.