OTTAWA – The pace of housing starts picked up August, boosted by big multiple-unit projects in Toronto, even as the Canadian real estate market showed signs of cooling.
Canada Mortgage and Housing Corp. said Tuesday there were 19,860 actual housing unit started in August to set a seasonally adjusted annual pace of 224,900 units for the month, up from 208,000 in July.
The consensus estimate by economists had been for a seasonally adjusted annual pace of 201,000.
“This increase is primarily a reflection of the high level of pre-sales in some of these large multi-unit projects in late 2010 and early 2011, which is in line with job gains at that time,” said Mathieu Laberge, deputy chief economist at CMHC’s Market Analysis Centre.
“The higher level of starts recorded in Atlantic Canada and British Columbia in August reflect low levels of activity in July rather than an increasing trend that was registered in August. Overall, moderation in housing starts activity is still expected for the remainder of 2012 and 2013.”
TD senior economist Jacques Marcil said the data shows Canadian housing construction remains in high gear and suggested the pace won’t continue.
“The rest of the economy is growing much slower and as a consequence is not likely to be able to support this level of housing supply for much longer,” Marcil warned.
“While recent changes to mortgage insurance rules will likely limit the growth in demand for new homes, low interest rates remain an incentive for buyers to borrow and keep the housing market overvalued.”
Last week, Toronto Real Estate Board reported that sales of existing homes in the Toronto fell 12.5 per cent from last year, although the average price of $479,095 was 6.5 per cent higher.
Meanwhile, the Vancouver board said sales dropped 30.7 per cent in August, while the average price was only 0.5 per cent lower at $609,500.
The drop in sales followed a move by Finance Minister Jim Flaherty to reduce the amortization rate on new government insured mortgages to 25 years from 30.
It was the fourth time in as many years the minister has tightened mortgage rules.
CMHC said Tuesday that the seasonally adjusted annual rate of urban starts increased by 10.2 per cent to 205,900 units in August.
Urban single starts remained relatively unchanged in August at 64,300 units, while multiple urban starts increased by 15.5 per cent to 141,600 units.
August’s seasonally adjusted annual rate of urban starts increased by 47.5 per cent in Atlantic Canada, by 20.4 per cent in Ontario, by 18.2 per cent in British Columbia and by 1.3 per cent in the Prairies, while they dropped by 9.8 per cent in Quebec.