Canada’s housing starts beat economist predictions for a fourth straight month in July, led by the most single-family home projects in almost two years.
The pace of work on new homes rose 0.7 percent to a seasonally adjusted annual pace of 200,098 units, the fastest since October, from a revised 198,665 in June, Ottawa-based Canada Mortgage & Housing Corp. reported today. Economists forecast a decline to 193,000, according to the median of 18 responses in a Bloomberg News survey.
Most economists and the central bank have predicted that rising prices and near-record debt loads would curb demand for housing. Instead, home resales, prices and starts have climbed after a tough winter, as mortgage rates remain near record lows.
“CMHC continues to expect a soft landing for the new home construction market in Canada,” the agency’s chief economist Bob Dugan wrote in the report.
Single-family starts in urban areas rose 4.7 percent to 67,062 in July, the report showed. Multiple-unit housing such as apartments and condominiums declined 2.0 percent to 115,870 units.
Canada’s dollar strengthened 0.1 percent to C$1.0958 per U.S. dollar at 9:34 a.m. in Toronto. Canada’s government five-year bond yield, a benchmark used by lenders in setting mortgage loans of the same term, fell to 1.50 percent from 1.51 percent.
The pace of starts over the past four months has averaged 197,776 units, compared with the average consensus forecast of 185,750 units.
Bank of Canada Governor Stephen Poloz said in June he expects a soft landing and that the country’s main domestic financial risk is from “stretched valuations and some signs of overbuilding” in the housing market. Construction of condominiums in Toronto and Vancouver surged in recent years.
“A deceleration in multi starts may be exactly what the market needs considering that overbuilding caused gluts in some regions of the country,” Krishen Rangasamy, senior economist at National Bank Financial in Montreal, wrote in an e-mailed commentary.