Canadian housing starts unexpectedly rose for a third month in June led by single-family dwellings, adding to signs the nation’s real estate market is defying predictions of a slowdown.
Builders started work on 198,185 homes at a seasonally adjusted annual pace for a monthly gain of 0.6 percent, Ottawa-based Canada Mortgage & Housing Corp. said today. Economists forecast a decline to 190,000, according to the median of 17 responses to a Bloomberg News survey.
Building permits and home resales have also recorded gains this month following weakness earlier this year when a harsh winter hampered transactions. Record-low mortgage rates are also sustaining demand after warnings from Bank of Canada Governor Stephen Poloz that some families may be vulnerable to increased debt loads when interest rates eventually rise.
“The new-home construction market in Canada is headed for a soft landing in 2014,” CMHC chief economist Bob Dugan said in today’s report. “Builders are expected to continue to manage their building activity to ensure that demand from buyers seeking a new unit is channeled toward unsold units, whether these are under construction or completed.”
Single-family starts in urban areas rose 0.9 percent to 63,164, CMHC said today. Multiple-unit starts increased 0.1 percent to a pace of 118,815 units. The June gain brings the increase in starts over the last 12 months to 2.5 percent.
Consumer confidence approached its 2014 high last week on optimism about real estate prices, according to the Bloomberg Nanos Canadian Confidence Index. The 44.3 percent of respondents who said home values in their neighborhood would rise in the next six months was the most since the fourth quarter of 2009, when construction surged following a slump.