Canadian housing starts CMHCPhoto: James Bombales

As market analysts continue to mull over the extent that declining oil prices will impact the country’s housing market, the Canada Mortgage and Housing Corporation (CMHC) today released its housing starts figures for January.

And the numbers show that Canadian homebuilders aren’t ready to dial back new construction activity just yet.

Housing starts gained ground in January, with the nationwide total rising to a seasonally adjusted rate of 187,276 units, up from 179,636 units in December.

Urban housing starts led the way, increasing to 172,322 units in January from 161,940 units in December. Multiple urban starts drove the uptick, rising to 115,008 units in January over 102,384 in December. Meanwhile, single-detached urban starts posted a small drop to 57,314 units from 59,556 in the previous month.

In Alberta, where falling oil prices are expected to have the greatest impact on housing activity, starts posted a strong increase in January, rising to 44,800. As for the other Prairie provinces, Manitoba saw an increase in starts while Saskatchewan saw a decline.

“The advance in the Prairies is particularly notable, as it is the region expected to be especially hard hit given the recent decline in oil prices,” said Randall Bartlett, a senior economist at TD.

“That said, this likely reflects momentum from a strong year in housing demand overall in 2014 as opposed to renewed strength. The gain in the Prairies, in particular, is unlikely to be sustained in the wake of a marked drop in home sales through December and January.”

Meanwhile, Ontario saw a “modest gain” in urban starts and British Columbia and Quebec saw declines.

Because month-to-month housing data can be volatile and potentially misleading, the CMHC also publishes a six month moving trend of the seasonally adjusted annual rate of starts. The trend registered a decline in January, moving down to 188,956 units from 191,627 in December.

“The trend in total housing starts has been moderating since September 2014, reflecting lower trends in both multiple and single-detached starts,” said Bob Dugan, CMHC’s Chief Economist.

“Overall, economic and demographic factors remain supportive of housing demand. The moderation in new home construction reflects inventory management by builders and is in line with CMHC’s expectations.”

According to Bartlett, January housing starts do not reflect the Bank of Canada interest rate cut made late last month.

“[T]he subsequent drop in lending rates can be expected to help keep the Canadian housing market more buoyant than would otherwise be the case,” he said.

Last week, the CMHC published its 2015 Housing Market Outlook for the first quarter of the year. The report predicted moderation for the Canadian market for 2015 and 2016 with housing starts dropping one per cent in 2015 and MLS sales remaining static.

The CMHC’s point forecast for housing starts in 2015 and 2016 was 187,400 and 185,100 units, respectively.

Bartlett said today that TD has a “more pessimistic view on the economic prospects for Canada over the next couple of years than the CMHC” and is forecasting 177,000 units for both 2015 and 2016.

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