Canadian housing starts rise strongly in November, likely to ease next year

Housing starts in Canada rose strongly in the month of November. Canadian builders broke ground on 252k housing units in the month, up 13 percent sequentially. The six-month moving average rose to 226k. In the multi-family segment, housing starts drove the headline rise, growing 16.5 percent in November. Housing construction was up 5.9 percent in the single-detached market.

Province-wise, housing starts rose in six out of 10 provinces. Ontario led the gains where starts rose a robust 38k to 98k units. Manitoba and Alberta also recorded higher starts with the rate of homebuilding in the latter market the highest since March.

New home construction also rose in all of the Atlantic Provinces except New Brunswick. In British Columbia, starts moderated a bit from the multi-decade high reached in October, though the level was strong at 48k. Meanwhile, housing starts in Toronto market rose to 45k. But, they have decelerated in the fourth quarter so far as compared with the strong rate in third quarter.

Homebuilding activity was quite strong in November, rising to its highest level since April 2012. Housing construction has stayed resilient in 2017 in spite of the ‘one-two punch’ of regulatory measures aimed at easing housing demand and rising mortgage rates.

“Despite today's blowout report we expect homebuilding to ease to a sub-200k pace in 2018, as higher mortgage rates and updated B20 regulations from OSFI weighing on housing starts, with disproportional impact on the Toronto and Vancouver markets where housing affordability remains highly stretched”, stated TD Economics.

At 17:00 GMT the FxWirePro's Hourly Strength Index of Canadian Dollar was highly bearish at -110.03, while the FxWirePro's Hourly Strength Index of US Dollar was highly bullish at 118.091. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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