Canadian housing starts rose 9.1% to a seasonally adjusted annual rate of 212,695 units in June, Canada Mortgage and Housing Corp. said Tuesday.
Market expectations were for housing starts to move higher in June to an annual rate of 200,000, according to economists at Royal Bank of Canada. CMHC said May's figures were revised slightly upward, and now show seasonally adjusted housing starts of 194,955 for the month.
The June figures represent a strong rebound in housing activity, mostly centered across Ontario, the country's most populous province, according to CMHC data. While overall figures in Toronto are relatively little changed from the previous month, construction of ground-oriented homes, which includes single-detached, semis and townhomes, has hit a five-year high, CMHC said.
"The trend in housing starts for Canada reached its highest level in almost five years," said Bob Dugan, CMHC's chief economist, in a statement. "So far this year, all regions are on pace to surpass construction levels from 2016 except for British Columbia."
Policy makers have moved in recent months to help cool Canada's frothy housing market, notably in Toronto and Vancouver, two of the country's biggest cities. Home sales in Toronto, for example, have dropped 37.3% in June, the second-straight month of double-digit declines, after Ontario lawmakers introduced more than a dozen new measures in April to help contain the market. Home prices in Toronto, however, have yet to decline, according to recent data from the city's real-estate board.
Further cooling may arrive in the coming months following the Bank of Canada's monetary-policy announcement on Wednesday. Economists widely expect the central bank to raise interest rates for the first time in seven years.
CIBC World Markets economist Nick Exarhos said strength in residential homes investment firmed Canadian housing starts in the first quarter, and early indications suggest home-building will continue to be a solid growth contributor for the rest of the year.
"Still, a softening in permit activity, and a smaller backlog of unused permits, signal that there won't be much upside for starts from here," he said.
CMHC's June report said urban housing starts rose 9.6% to 194,773 units. Multiunit urban starts, which includes condominiums, increased 9.4% to 127,944 units, while single-detached starts in urban centers advanced 10.1% to 66,829.
Rural starts were estimated at a seasonally adjusted annual rate of 17,922 units.
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(END) Dow Jones Newswires
July 11, 2017 09:24 ET (13:24 GMT)