Housing starts post slight increase in August

Trend defied predictions of economists, who were expecting a decline last month

Housing starts post slight increase in August
Latest numbers from the Canada Mortgage and Housing Corp. showed that the 6-month trend of housing starts nationwide remained at a strong 219,447 units in August, up from 217,339 in July.

Meanwhile, last month’s seasonally adjusted annual rate of housing starts across Canada was 223,232 units, up from 221,974 the month prior.

These significantly exceeded observers’ predictions of the annual rate of housing starts, which was expected to stand at 216,000 units in August.

“Canada’s trend in housing starts was above the 200,000 unit mark for the eighth consecutive month,” CMHC chief economist Bob Dugan stated. “Demand for new homes remains strong, consistent with consumer confidence which reached its highest level in ten years.”

Ontario contributed to a large portion of last month’s increase with starts going up to 95,000, the highest rate of activity in the province since 2003.

“This remains largely a [Greater Toronto Area] story, and still one of ample condo supply, but a dearth of single-detached units,” BMO Capital Markets senior economist Robert Kavcic told CBC News.

According to the CMHC data, condominium apartment starts in Toronto approached a seasonally adjusted annual rate of 36,000.

“The unprecedented pre-construction condominium apartment sales levels seen over the past few years will ensure that high-rise construction remains strong in the near term,” CMHC explained.

“All in all, we expect Canadian housing starts to remain relatively healthy in the coming months, but begin to trend lower as the effects of rising interest rates...and potential new regulation...gradually take a bite out of demand,” TD senior economist Michael Dolega said.

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