Canadian housing starts rose to their strongest level in seven months in May, as the industry rebounds from the impact of a harsh winter.
Builders began work on 198,324 homes at a seasonally adjusted annual pace in May, Ottawa-based Canada Mortgage & Housing Corp. said on its website today, up from a revised 196,687 the previous month. Starts averaged 174,984 in the first quarter of this year.
A slump in construction in the first three months of the year was a drag on growth during the quarter, with home building recording its biggest quarterly decline since the recession, Statistics Canada reported May 30.
“After what were probably weather-related interruptions over Q1 during a worse than average winter for many regions of the country, the average pace of homebuilding activity is on the mend,” Derek Holt, vice president of Scotiabank Economics, said in a note to investors. “Housing should therefore contribute positively to GDP growth” in the second quarter.
The Canadian dollar strengthened after the report, gaining 0.1 percent to C$1.0917 per U.S. dollar at 9:50 a.m. in Toronto. Bonds fell, with the yield on the 5-year government benchmark bond rising 2 basis points to 1.60 percent.
Economists forecast a reading of 185,000, according to the median of 17 responses to a Bloomberg News survey.
CMHC, citing little change in the six-month moving average of housing starts, said today’s numbers reaffirm expectations the market is undergoing a “soft landing.” Home starts have averaged 184,438 the previous six months.
“Builders are expected to continue to manage their starts activity in order to ensure that demand from buyers seeking new units is first channeled toward unsold completed units or unsold units that are currently under construction,” Bruno Duhamel, manager of housing and economic analysis at the agency, said in the statement.
Single-detached homes in urban areas led gains, rising to an annual pace of 63,104 in May from 59,845 in April. Multiple unit starts fell to 117,709 from 118,640.