Canadian housing starts fell twice as fast as economists expected in January, led by a drop in multiple-unit projects.
Work on new homes fell 3.7 percent to a 180,248-unit annualized pace, the third straight decline, Ottawa-based Canada Mortgage & Housing Corp. said today. Permits for dwellings such as apartments and condominiums fell 6.0 percent to 102,289 units and single-family homes rose from the lowest since July 2009 in January, gaining 3.4 percent to 60,869 units.
Bank of Canada Governor Stephen Poloz expects a “soft landing” for the housing market after consumer spending and record debt accumulation led the world’s 11th economy out of the 2008 global financial crisis. CMHC said today’s figures are in line with its prediction that builders will slow new construction to avoid an inventory glut.
“Housing no longer looks to be a source of growth,” for the economy, said Avery Shenfeld, chief economist at CIBC World Markets in Toronto, in a note to clients.
The Bank of Canada’s growth outlook calls for increasing exports and business spending to take over from consumers.
“A slower pace of construction activity to start the year is consistent with the wider theme of domestic fatigue that will inevitably put more pressure on net exports to drive the next stage of Canada’s economic recovery,” said Connor McDonald, economist at Toronto-Dominion Bank, in a client note.
Canada’s dollar was 0.2 percent weaker after the report, trading for C$1.1048 per U.S. dollar at 9:14 a.m. in Toronto. One Canadian dollar bought 90.51 U.S. cents
Economists surveyed by Bloomberg had forecast a decline to 185,000 from the revised December reading of 187,144.