Canadian housing starts rose sequentially in June, likely to remain below 200k mark

Canada’s housing starts rose sequentially in June. Starts rose 28 percent from May’s downwardly revised 194k to 248k. This shows the first rise after three straight months of declines. The multi-family segment led the recovery, rising 55.5k to 179k units, and was accompanied by a modest fall in single-detached starts to 69k.

This month’s rises were concentrated in Ontario, with the province’s starts rising 92.6 percent sequentially to 101k units. Six other provinces recorded rises in starts, including Quebec, Nova Scotia and New Brunswick. Meanwhile, declines were seen in British Columbia, Alberta and Saskatchewan. Starts rose 138 percent in Toronto, pushed by rises in the multi-family sector. Montreal also saw rises in activity, whereas Vancouver’s market activity dropped 9.5k to 17k.

Today’s release was a surprise on the upside, particularly in the Toronto market. However, the recovery in the multi-family segment was expected given recent strength in building permits data, in addition to the 12-month lows seen in the multi-family segment in May, stated TD Economics in a research report.

While this recovery is not surprising, its magnitude is more pronounced than anticipated, resulting in a slightly higher than anticipated second quarter performance. However, it is significant to note that the rises were concentrated in one segment, and were mostly within the Ontario region.

The higher-than expected growth, along with the recently-released permits data indicating declines in issuances, should result in a pull-back in the remaining half of the year, with starts expected to stay modestly below the 200k mark, noted TD Economics.

“Going forward, starts should ease into the remaining part of the year in light of rising interest rates, macro-prudential regulations, and affordability in the Toronto and Vancouver markets weighing on demand”, added TD Economics.

At 16:00 GMT the FxWirePro's Hourly Strength Index of Canadian Dollar was slightly bearish at -104.925, while the FxWirePro's Hourly Strength Index of US Dollar was neutral at -44.005. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyinde