Canadian housing starts rise in November, likely to see further upside in coming months

Canadian housing starts rose in November, rising 4.4 percent to 215.9k units, higher than the slightly upwardly revised 206.7k level from October. November’s rate bested forecasts calling for a modes pullback to 196k. On a trend, six-month moving average basis, starts rose to 210k units, and marks the first uptick since June.

Unsurprisingly, November’s national gain was focused in the volatile multi-family category, which rose 3.9 percent to 151.6k units. Single-detached starts in urban areas also rose, recording a strong rise of 7.8 percent to 50.5k units, partially reversing October’s fall. Rural starts continued to trend lower on a six month moving average basis, reaching a new 35-month low of 14.1k units in November.

Urban starts rose in 7 provinces out of 10. Atlantic Canada saw a move higher in all regions, especially in PEI. Activity weakened in central Canada, as falls were seen in Ontario and Quebec. Starts were widely higher in Western Canada, led by a rise in activity in Manitoba, Alberta, and British Columbia. Housing starts in Saskatchewan dropped 3.9k to 2.9 units, more than reversing the sharp rise in October to 6.8k units.

This was the second straight month when starts rose, and is widely supportive of Canadian residential investment for the fourth quarter.

“Given the upward trend in building permits through October, there's a good chance that housing starts will continue to see some further upside in the months ahead for both single and multifamily units”, stated TD Economics in a research report.

Going forward, higher interest rates and affordability retrains in major CMAs might act to hold the rate of new residential construction below that prior to the B-20 guideline changes.

“That said, abstracting from temporary negative income shocks in the near-term related to oil industry woes, a steep downturn in homebuilding nationwide appears unlikely. Canada's population is on the rise, medium-term income growth should remain healthy, and most markets are generally not overbuilt”, added TD Economics.

At 16:00 GMT the FxWirePro's Hourly Strength Index of Canadian Dollar was highly bearish at -109.968, while the FxWirePro's Hourly Strength Index of US Dollar was bullish at 91.537. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex