Housing starts rise 5.9% in December

OTTAWA — House construction rose more than expected in December as Canada's real estate market continued to show signs of recovery.

Canada Mortgage and Housing Corp. said Monday the number of seasonally adjusted housing starts were up 5.9 per cent from November, to 174,500 units. Most economists had expected an increase of between 160,000 and 165,000 units in December, following an upwardly revised 164,800 starts the previous month.

"The improvement in housing starts was broad based in December," said CMHC chief economist Bob Dugan. "Solid increases occurred in both single and multiple starts to end the year."

Urban starts were up 6.6 per cent to 157,100 units in December, CMHC said in its report. Multiple-unit starts totalled 77,700 during the month, up from 72,800 units in November, while single-unit starts totalled 79,400, up 6.4 per cent from the previous month.

Urban construction was up 17.8 per cent in Quebec, 15 per cent in Atlantic Canada, 8.7 per cent in British Columbia and 2.9 per cent in Ontario, the report said. In the Prairies, urban starts declined 3.8 per cent.

Rural starts were unchanged at 17,400 units.

"Overall, the uptick in Canadian residential starts underscores the improving response of builders to the dramatic rebound in overall Canadian housing market activity," said Ian Pollick, economics strategist at TD Securities.

"It is increasingly looking like the 'fever' in the existing home sales market is starting to catch in the new residential housing market. Further, the pullback seen in permits strikes us to be an unwind from unsustainably strong gains due to one-off factors."

Meanwhile, Statistics Canada said Monday the value of building permits fell in November by 4.6 per cent from the previous month to $5.9 billion. Still, that was 23.1 per cent higher than November 2008 and 62.8 per cent higher than February 2009, "when the lowest value during the economic downturn was recorded," the federal agency said.

"However, November's value remained below values recorded in 2007 and early 2008."

The decline was due to a drop in the non-residential sector, which offset increases in the residential sector, the agency said.