(Adds details from report, background, comments)
OTTAWA Feb 8 Canadian housing starts
unexpectedly rose in January as Ontario saw a strong increase on
ground breaking of new homes, suggesting home construction got
off to a strong start in 2017.
The seasonally adjusted annualized rate of housing starts
rose to 207,408 units from a downwardly revised 206,305 in
December, the Canadian Mortgage and Housing Corporation (CMHC)
said on Wednesday. Economists had expected starts to decline to
The increase was driven by a 4.2 percent gain in the
multiples segment, which includes condominiums, while new
construction on single-detached homes declined 4.6 percent.
Ground breaking in Ontario led the way higher with an
increase of 25.1 percent to 96,883 units, possibly helped by the
"Milder than usual winter weather in Ontario may have
brought out more hammers and shovels than normal - and at the
potential expense of housing starts later," said Derek Holt, an
economist at Scotiabank.
Starts also increased in the Atlantic provinces, although
they declined in Quebec and the Prairies.
Ground breaking continued to fall in British Columbia and
were down 32.6 percent at 26,308. Housing activity had already
begun to slow in the province last year before the provincial
government implemented a tax on foreign home buyers in Vancouver
Canada's housing market has been robust in the years since
the global financial crisis, supported by low interest rates
that have seen consumers take on more debt.
But last year's changes by the federal government to tighten
mortgage lending rules are expected to mitigate some of the
run-up in housing seen recently, particularly in the hot markets
of Toronto and Vancouver.
Although housing is expected to slow later in the year,
recent building permit data suggest housing starts could still
see a few more strong readings, said Nick Exarhos, economist at
CIBC Capital Markets.
Housing is likely to be a modest drag on overall economic
growth this year as there is little room for the sector to
accelerate from 2016's strong activity, Exarhos said.
(Reporting by Leah Schnurr; Editing by Bill Trott)