OTTAWA – Canadian housing starts rose in July, exceeding market expectations by a significant margin, in a sign the real-estate sector shows no signs of slowing despite government measures to tamp down price surges.
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Housing starts rose 4.4% to a seasonally-adjusted rate of 222,324 units in July from the previous month, Canada Mortgage and Housing Corp. said Wednesday. Market expectations were for a rise to 205,000, according to economists at Royal Bank of Canada.
The housing agency said July marked the seventh straight month of increased residential construction. Further, July represented the seventh time in eight months that housing starts exceeded 200,000 at a seasonally adjusted and annualized rate.
"Housing starts aren't showing many signs of cooling down in the summer, " said economists at CIBC World Markets. "We had expected to see some slowing in starts already and for residential construction to become a drag on overall economic growth before the end of the year -- however that area of the economy continues to surprise to the upside."
Meanwhile, Statistics Canada said building permits in June rose 2.5% from the previous month to 8.06 billion Canadian dollars ($6.36 billion) on stronger demand to construct multifamily dwellings and office buildings. Expectations were for permits to decrease 1.9% in June, according to economists at Royal Bank of Canada.
Policy makers have moved in recent months to help cool accelerated gains in Canadian house prices, most notably in Toronto and Vancouver, two of the country's biggest metropolitan areas.
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CMHC said Vancouver housing starts rose slightly in July due to the construction of more townhomes and apartments in suburban communities, such as Burnaby, British Columbia and New Westminster, British Columbia. The agency said "relative affordability" of more modestly priced townhomes and apartments in these communities supported consumer demand.
Meanwhile, total housing starts in the Toronto region trended lower in July, CMHC said. Still, total Toronto housing starts remain close to the average level recorded so far in 2017, the agency added, due to strong increases in semidetached and townhomes.
The Toronto real estate board said sales in July fell over 40% on a year-over-year basis, although prices rose 18%. The province of Ontario introduced measures in April to slow down Toronto-area housing, including a tax on purchases made by foreigners.
Meanwhile, single-detached starts in London, Ontario -- about 120 miles west of Toronto -- posted their highest levels for the month of July in a decade, and CMHC attributed this to the city's attractiveness given the steep price for Toronto-area real estate.
CMHC's July report added urban starts increased by 5.5% in July to 206,122 units. Multiple urban starts increased by 10.4% to 141,950 units in July and single-detached urban starts decreased by 3.9%, to 64,172 units.
Rural starts were estimated at a seasonally adjusted annual rate of 16,202 units.
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(END) Dow Jones Newswires
August 09, 2017 09:39 ET (13:39 GMT)