Canada Housing Starts Posted Rare Drop in September

Canadian housing starts fell in September after eight straight monthly gains, although the level remains elevated and suggest residential construction lifted economic growth in the third quarter.

Starts declined 3.9% to a seasonally adjusted annual rate of 217,118 units in September from the previous month, Canada Mortgage and Housing Corp. said Tuesday. Market expectations weren't immediately available.

Still, economists note the level in September marked the eighth time in nine months that housing starts were over the 200,000 mark.

"Canadian homebuilding activity remains robust, with the best population growth in 25 years proving fundamental support," said Robert Kavcic, economist at BMO Capital Markets. He said after a modest decline in the second quarter, residential investment appears to have added to Canadian economic output in the July-to-September period.

The 12-month average held steady at roughly 212,000.

On a regional basis, the losses were concentrated in Ontario, which had the worst month since May. The performance comes on the heels of two interest rate increases from the Bank of Canada in recent months and measures introduced in the spring aimed at cooling accelerated house-price appreciation in the greater Toronto region.

Yet, the quarterly pace of housing starts in Ontario -- Canada's most populous province -- in the July-to-September period was the second-fastest in a decade. "The overall market appears to be taking higher interest rates in stride and remains healthy," said Michael Dolega, economist at TD Bank.

CMHC's September report said urban housing starts fell 5.1% to 198,910 units. Multiunit urban starts, which includes condominiums, dropped 10.7% to 131,388 units, while single-detached starts in urban centers climbed 8.2% to 67,522.

Rural starts were estimated at a seasonally adjusted annual rate of 18,208 units.

(END) Dow Jones Newswires

October 10, 2017 10:44 ET (14:44 GMT)