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Canadian housing starts remain sound in October
Canadian housing starts remained at a healthy rate in October, coming in at 202 units. Sequentially, starts dropped 8.7 percent from September’s solid level of 221.1k. Single-detached construction continued its recovery, with urban single-detached starts rising 2.4 percent to 49.8k units. On the contrary, urban multi-family starts dropped 12.5 percent to 139.5k units, with widespread falls throughout most provinces.
Starts in Ontario dropped 13.4k to 71.8k units, driven by the multi-family sector. This might be a hint that past falls in pre-construction condo sales are feeding through to homebuilding. Fall in Ontario was almost fully countered by a hearty gain in Quebec. Housing construction continues to be solid in Quebec, underpinned by strong job markets, low levels of unabsorbed inventories and low rental vacancy rates. Starts in B.C. fell 6.4k to 34.8k units, owing to dropping multi-family construction in Vancouver. Markedly, Vancouver’s market continues to unwind from elevated levels earlier on that were inflated by a rush to beat a new development charge.
Starts in the Prairies dropped 18.8 percent sequentially. Homebuilding fell in Alberta though is still on an upward trajectory. In Saskatchewan, starts fell 1.2k to 2.7k units. New construction continues to be low on a trend basis in Saskatchewan, in the midst of a comparatively soft economic conditions. In Manitoba, starts rose 2.2k to 7.1k units.
In the Atlantic Provinces, starts fell 4.6k to 7.4k units. Starts dropped in every Atlantic Province, paced by a 2.2k units drop in New Brunswick. Still, homebuilding continues to be healthy on a trend basis throughout most provinces in the Atlantic.
“Alongside a probable modest gain in home sales (reported next week), October looks to have been a decent month for residential investment. And, this morning's report on residential building permits revealed strong issuance, indicating further near-term support for building. This is consistent with our forecast calling for residential investment to make a positive contribution to GDP growth in the fourth quarter”, said TD Economics in a research report.