Canadian housing starts rise in September

Canadian housing starts jumped again to 230,700 annualized units in September, the strongest level since 2012 and the third highest reading of the cycle. Recall that the last time we saw housing starts at this level, Ottawa was busy tightening mortgage rules back in 2012. For all of Q3, starts averaged a 212.7k pace, up from 192.9k in the prior quarter, and smoothing out the first nine months of the year leaves starts just over the 193k mark. Recall that starts were quite depressed early in the year (partly because of weather), and as a result, the year-to-date average not too out of whack with household formation, but the pace of starts seen over the last two months clearly can't be sustained for good. 

Both singe-detached and multi-family starts rose in the month, though the latter did most of the lifting, as usual. In fact, September's 157.9k tally for multis was the second highest in at least 25 years. Keep in mind there are two distinct markets here, and supply of singles remains very limited. 

Regionally, activity in Ontario (i.e., Toronto) ebbed slightly in September, but activity remains very high after last month's surge in condo starts. A total of 58k units (annualized) broke ground in Toronto in the month, which is a very lofty total. Keep in mind that new starts in Toronto were actually quite subdued through 2014 at less than 30,000 units (below demographic demand) as a number of projects reached completion. So, smoothing out the last 1-to-2 years of activity makes the supply story in the city more digestible, but the pace of new projects that we've seen start over the past two months can't be sustained. Note that a separate release on new home prices showed Toronto and Hamilton breaking away from all other cities in August, though each still well contained at just below 4% y/y.