Canadian housing starts rise sharply in April

Canadian housing starts surged in April, surpassing market expectations. Housing starts rose 23 percent sequentially to 235.5k units in April from an unrevised 192.5k units in March. On a six month moving average basis, starts rose to 206.1k units from 202.4k units in March.

Single-detached and multi-family starts both rose in April, although the gain was stronger for multi-family starts. Single-detached starts rose 6 percent to 56k units, whereas construction of multi-family units rose 29 percent to 179.5 units in April.

Homebuilding came in higher in seven of ten provinces. Ontario accounted for the majority of the national gain, with starts rising by 26.7k to 87.7k units. The bulk of Ontario’s rise came outside of Toronto, where starts rose by 5.9k to 38k units. Homebuilding rose in Alberta and Manitoba, while it dropped a bit in Saskatchewan. In spite of gains in Alberta and Manitoba in April, homebuilding continues to be weak in the Prairies, dragged on by weak economic conditions and inventory overhang.

Housing starts dropped a bit in Quebec after rising sharply to their highest level since 2012 in March. Meanwhile, starts rose in B.C., buoyed by a 13k gain in multi-family starts in Vancouver. In the Atlantic Region, starts rose modestly, as gains in New Brunswick, PEI and Newfoundland and Labrador countered a fall in Nova Scotia.

The surge in homebuilding in April bodes well for residential investment and overall economic growth in the second quarter, said TD Economics in a research report. However, on a trend basis, home building has decelerated from last year’s strong pace. This is in line with the forecast for starts to ease this year.

“Still, the level should remain healthy, buoyed by ultra-strong population growth, solid labour markets, past gains in pre-construction sales and low rental vacancy rates in large urban markets. The recent drop in borrowing costs will also provide support, although with a lag”, added TD Economics.

At 17:00 GMT the FxWirePro's Hourly Strength Index of Canadian Dollar was neutral at 24.729 while the FxWirePro's Hourly Strength Index of US Dollar was highly bullish at 119.992 more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex