Pace of Canadian housing starts rises in December: CMHC

The seasonally adjusted annual rate of housing starts across the country rose to 207,041 units in December, up from 187,273 units in November, Canada Mortgage and Housing Corp. reported Tuesday.

That's an 11.8 per cent increase in the pace of housing starts in December, with starts of urban multiple units rising by 13.9 per cent to 120,750 units last month. Starts of single-detached urban starts increased by 8.1 per cent, to 66,871 units.

CMHC said annual rate of urban starts increased in Ontario, Quebec and the Prairies, but decreased in British Columbia and in Atlantic Canada.

While the adjusted annual rate figure for December was higher, CMHC said the trend for the six-month moving average was down. The agency said the trend figure for the month was 198,053 units compared to 200,105 in November.

"December saw multi-unit construction slow for the third consecutive month in Canada, leading housing starts to trend down," said Bob Dugan, CMHC's chief economist.

"However, 2016 still counted more home starts than 2015. Increased demand for single-detached homes more than offset the decline we're seeing in multi-unit construction – a decline that's in response to efforts to manage current inventories," Dugan said in a release.

CMHC said looking only at seasonally adjusted, one-month data can be misleading because they are largely driven by the multi-unit segment of the market, which can swing significantly from month to month.

"Housing starts can be quite volatile, but the healthy December number was sufficient to keep the trend measure around the [200,000] level that has characterized 2016, roughly consistent with our estimates of household formation," TD senior economist Brian DePratto said in a commentary.

"Location matters however. While starts have kept pace with household growth nationally, in Ontario they have not. Conversely, there are some potential signs of overbuilding in Western markets," he said.

The pace of starts is expected to slow nationally, as tighter mortgage regulations and rising mortgage interest rates cool the housing market, he added. 

"However, Ontario is likely to remain supported by pent-up demand for some time," DePratto said.