(Adds details from report, economist quote, background)
OTTAWA, April 10 Canadian housing starts jumped
in March to their highest level in nearly a decade on a sharp
rise for multifamily buildings, defying expectations of a
slowdown, data showed on Monday.
The seasonally adjusted annual rate of housing starts rose
to 253,720 units from February, the Canada Mortgage and Housing
Corp said. That topped economists' forecasts of 215,000.
February was revised slightly higher to 214,253 units.
March's starts were at the highest level since September
2007, CMHC said. Multifamily starts jumped to 164,321 from
126,791, while single-family construction rose to 89,399 from
Economists, who had expected housing starts to cool this
year, said the strength in the first quarter could lend more
support to the economy than anticipated.
"A strong start to 2017 building sets the stage for
continued momentum in residential investment, something we
hadn't been counting on when we first outlined our annual
forecast," CIBC Economics economist Nick Exarhos said in a note.
Still, the Bank of Canada is not likely to change its dovish
tone when it makes its interest rate decision at its meeting on
Wednesday, Exarhos said.
The central bank is widely expected to keep rates at 0.50
percent, where they have been since the bank cut twice in 2015.
While some have said low borrowing costs are contributing to the
rise in Canadian home prices, Governor Stephen Poloz said
recently that low rates were not fueling housing speculation.
The increase in March starts was widespread.
In Vancouver, where prices began to cool last year as the
provincial government brought in a tax on foreign buyers, starts
jumped to 30,437 from 18,123.
Construction starts in British Columbia as a whole rose to
44,725 from 27,904.
In Toronto, where accelerating prices have prompted some to
call the market a bubble, starts climbed to 53,021 from 36,389.
Although the increase came from multifamily starts, construction
of single-detached homes has been trending higher since the end
of last summer, CMHC said. For Ontario, overall starts rose to
88,841 from 83,891.
With low supply seen as one of the factors behind rising
prices in Toronto, increased construction could help alleviate
worries of a lack of affordability. Federal Finance Minister
Bill Morneau and Ontario Finance Minister Charles Sousa are set
to meet to discuss the issue.
(Reporting by Leah Schnurr; Editing by W Simon and Lisa Von