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Canada’s housing starts rise in October, to gradually trend down over next year – TD Economics

Canada’s housing starts increased in October on a seasonally adjusted basis. Housing starts rose to 223k units in the month from 219k units in September. The six-month moving average rose to 217k from 215k. The rise was focused in the multi-unit segment, with starts rising 12.5 percent sequentially, after a decline in the prior month.

In the meantime, single-family starts dropped 17 percent in October. Ontario continued to be a subdued spot, with homebuilding activity falling sharply for a second straight month. Housing starts in Ontario have dropped almost 40 percent from the strong levels seen in August. On the other hand, British Columbia and Quebec have registered strong rises in new home construction.

Meanwhile, housing starts in Toronto also dropped for the second consecutive month while starts in Vancouver almost doubled to a 12-month high. The rises in Vancouver were mainly driven by the multi-unit segment.

Ontario might be a soft spot; however, healthy activity elsewhere aided starts rebound in October. Moreover, given the six-month moving average holding well-above the 200k mark, activity continues to be at quite healthy levels, noted TD Economics in a research report.

The effect of recent hikes in interest rate, along with the recently announced B20 regulations would possibly result in additional declines in new home construction in the quarters ahead.

“Indeed, we expect starts to gradually trend down toward the 190k mark over the next year, roughly consistent with demographic demand”, added TD Economics.

At 15:00 GMT the FxWirePro's Hourly Strength Index of Canadian Dollar was slightly bullish at 64.2823, while the FxWirePro's Hourly Strength Index of US Dollar was neutral at -18.6791. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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