Canadian housing starts fell more than expected in July on a decline in multiple-unit projects in British Columbia.
Construction of new homes dropped 6.1 percent from June to a 208,500 seasonally adjusted annual pace, Ottawa-based Canada Mortgage & Housing Corp. said today. Economists had forecast a reading of 213,000, based on the median of a Bloomberg survey with 19 responses. The agency lowered its June estimate to 222,100 from a previous reading of 222,700.
The reports adds to recent data from real estate boards that suggest Canada’s housing market is slowing, in part as policy makers take steps to rein in household borrowing. The value of purchases at eight major regional real estate boards that have reported figures for July fell 2.6 percent from a year earlier, according to data compiled by Bloomberg.
“There have been signs of moderation in existing home sales in recent months and we expect further easing to occur through the remainder of the year,” David Onyett-Jeffries, an economist at Royal Bank of Canada in Toronto, said in a note to investors.
Canadian home prices will decline 10 percent over the next two to three years, and the country’s housing market faces a prolonged period of modest sales and price gains, Bank of Nova Scotia economists said in a report yesterday.
Record levels of household debt and moves by the federal government to tighten mortgage rules should restrain housing growth, Scotia said.
Finance Minister Jim Flaherty tightened mortgage regulations for a fourth time in June on concerns that some families were taking on debts that will become unaffordable when borrowing costs increase.
Multiple-unit starts, which include condominium projects, decreased 7.6 percent in urban areas in July to 123,000 units, the housing agency said in today’s report. Single-family urban starts fell 4.0 percent to 64,300 units.
Canadian home building has been robust in recent months, helping to drive the nation’s recovery. The pace of housing starts has almost doubled from the low of 111,800 units in 2009 during the last recession, and starts in the April-June period were the strongest since the third quarter of 2007.
While the decline in July housing starts was “fairly broad-based,” CIBC World Markets economist Peter Buchanan said in a research note sent by e-mail, “further data points will likely be needed to confirm the start of a continuing slowdown” in the housing market.