Canadian housing starts rise sequentially in October, modest demand growth to limit homebuilding in 2019

Housing starts in Canada rose sequentially in the month of October. Starts were up 8.5 percent, rising to 205.9k. The pace of October was higher than expectations. Nevertheless, on a longer-term six month average basis, starts dropped slightly to 206.2k. The gain in October was focused in multi-family starts, which rose 17 percent to 149.1k units. Single-detached starts provided some offset, dropping 9 percent to 56.8k units.

Out of 10 provinces, urban starts rose in 5. Homebuilding rose in Ontario and Quebec. Starts also rise in B.C. and Saskatchewan. On the contrary, starts dropped in every Atlantic Province except for New Brunswick, and were also lower in Manitoba and Alberta.

As was expected, starts rose in October, setting residential investment off on the right foot to start the fourth quarter. It also helps counter what will possibly be reported as a modest fall in October home sales when the national data is released next week, noted TD Economics in a research report.

“Looking ahead, modest demand growth should keep a lid on Canadian homebuilding during 2019 and 2020, implying less thrust from what was once a steady contributor to economic growth”, added TD Economics.

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