Canadian housing starts inched up in September, partially offsetting a slip in August, according to data released by the Canada Mortgage and Housing Corporation on Wednesday.
In line with market expectations, the seasonally adjusted annual rate (SAAR) of housing starts hit 197,343 units in September, up modestly from 196,283 in August.
The trend measure of the number of new homes on which building began during the month of September equated to 197,747 housing starts compared to 191,095 in the previous month, the agency said. CMHC uses the trend (a six-month moving average of the SAAR) to get a more complete picture of the state of the housing market.
“The increase in the trend reflects stronger starts activity since April, largely concentrated in multi-unit dwellings including condominiums,” said Bob Dugan, CMHC’s Chief Economist.
Dugan added, however, that the elevated level of condominium units under construction right now supports the agency’s view that condo starts should trend lower over the coming months.
In September, the seasonally adjusted annual rate of urban starts increased in Quebec, Ontario and the Prairies, while it decreased in British Columbia and Atlantic Canada.
TD economist Jonathan Bendiner also pointed out in a research note that higher interest rates and a moderate level of overbuilding could mean a slow in starts is looming.
“Despite the continued resilience in new construction in activity, we continue to expect a gradual slowdown in housing starts towards more demographically supported levels (180,000) by the end of next year,” he said.
The housing starts data comes the day after Statistics Canada released its numbers on the value of Canadian building permits, which saw a steep decline in August after three consecutive months of double-digit gains. Forecasters have said that the pullback in permits might cause some downside risk to their housing starts forecasts, but that permit data isn’t usually a market mover.
Bank of Montreal economist Robert Kavcic added that starts appear to have hit a ceiling at the 200,000 mark, which suggests that overall building activity in Canada remains within the range required to satisfy demographic demand.
“This will let policymakers breathe easier,” he wrote.