Canada Sept Housing Starts -4.0% M/M to 217.1k, Above Expected

--Decline Still Above Analyst Expectations

By Courtney Tower

     OTTAWA (MNI) - Canadian housing starts fell 4% in September from August to

a seasonally adjusted annual rate of 217,118, although new home construction

remained "very strong," Canada Housing and Mortgage Corporation reported

Tuesday.

     The September performance was still better than expected by analysts in a

MNI survey, who had anticipated starts to come in at 210,000.

     On the six-month trend basis preferred by CMHC as a more reliable guide to

performance, starts in September were also down, to 214,821 compared with

220,573 in August.

     The lower trend broke eight consecutive months of increases, Bob Dugan,

CMHC chief economist, said in the Corporation's news release.

     "Nevertheless," he added, "new home construction remains very strong as the

seasonally adjusted number of starts (month-over-month) was above 200,000 units

for four straight months."

     Urban starts declined in September by 5.1% to 198,910 units, while rural

starts were estimated at 18,208 units.

     Multiple urban starts decreased by 10.7% to 131,388 units in September,

while single detached urban starts rose by 8.2% to 67,522 units.

     For the Toronto census metropolitan area (CMA), CMHC said total housing

starts were 7% down in September from August, "led by lower apartment starts."

CMHC said monthly variations in high-rise starts "are typical given delays in

getting large-scale projects off the ground." Low-rise starts "remained strong."

New home building in Toronto overall "remains stable as strong demand for new

homes in the Toronto CMA continues to persist."

     In the Vancouver CMA, Canada's other large market and for years very hot,

fewer multi-family units were started. CMHC attributes that to the high level of

starts over the past year creating a record number of units now under

construction and little capacity left for additional projects.

     However, new home construction in the area "is being supported by

population growth, a strong local economy, and low financing costs," CMHC said.

     Year-over-year, the Toronto area recorded a 16% rise in September over

September last year. Vancouver, on the other hand, was down 49% with 1,573

starts compared with 3,090 in September last year.

     In the province of Alberta, hit by collapsing oil prices and large job

losses in that industry, Calgary's starts dropped 24% in September from

September a year ago. In the capital city, Edmonton, on the other hand, starts

were up 32% from a low number the previous September. In the other chief oil

provinces, Saskatchewan (-22% year-over-year) and Newfoundland and Labrador

(-23%) the oil effects linger.

     Over the country as a whole starts in the four Atlantic provinces in

September were just up 4% over September a year ago. In the three Prairie

Provinces (Alberta, Saskatchewan, Manitoba) they rose only 2%. Ontario was up

13% and British Columbia down 18%, while Quebec was up 5%.

     Analysts responses to the September decline were positive.

     "Despite the drop in September, Canadian residential construction remains

at a level that is higher than demographic needs (estimated to be around 190K),"

said the CIBC. "Builders were motivated due to solid demand that was fueled in

Q3 by a solid labor market and low interest rates."

     For the National Bank, "the contribution from new home construction should

remain reasonably firm, as the deluge of new projects commenced in 2017 are seen

through to completion. All told, not much to change our story on housing, or the

Canadian outlook with today's figures."

--MNI Ottawa Bureau; +1 613 869-0916; email: yali.ndiaye@marketnews.com

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