CMHC: Canada January Home Starts Unchanged At 216,210 SAAR

--Remains Near 10-year High, Above Expectations

By Courtney Tower

     OTTAWA (MNI) - Canadian housing starts held steady in January, remaining

near a 10-year high level and above analyst expectations, at 216,210 units

seasonally adjusted at an annual rate (SAAR), the Canada Mortgage and Housing

Corporation announced Thursday.

     January SAAR starts were essentially unchanged from the 216,275 recorded in

December, CMHC said, while analysts had expected 210,000 for the month.

     The six-month trend which the CMHC prefers as a guide to home starts was

224,865 units for January, again little changed from 226,346 in December. It was

the third consecutive month of essentially no change, "remaining near the

10-year high set in December," Chief Economist Bob Dugan said.

     --MULTI-UNIT STRENGTH

     The ongoing strength for the past three months "reflects higher starts of

multi-unit dwellings in urban centers in recent months, which has offset lower

starts of single-detached homes," Dugan said.

     Multiple urban starts held steady at 134,685 units in January while the

higher-priced single-detached urban starts actually increased by 0.6% to 63,715

units. Total SAAR urban starts rose 0.2%.

     The data remaining at historically high levels comes as a key factor in

Bank of Canada policy interest rate deliberations, as it has been planning for

slower residential housing growth this year.

     The BOC said on January 17 when it raised its policy rate by 25 basis

points to 1.25%, the third such raise in six months, that "looking forward,

consumption and residential investment are expected to contribute less to

growth, given higher interest rates and new mortgage guidelines."

     The central bank still will emphasize one key data that it will consider in

deciding on future rate changes, which will be the "vulnerability" it sees in

Canada's record household debt.

     Many analysts expect a Bank of Canada to pause past the next fixed rate

announcement date, March 7, to perhaps May 30 or July 11, when, among other

things, the future of the NAFTA pact may be more clear.

     --VANCOUVER, TORONTO DIVERGE

     The housing starts picture for January is varied across the country, but

the two main markets closely watched, Toronto and Vancouver, show different

January results.

     In the Vancouver Census Metropolitan Area, SAAR starts of 32,289 units were

down 3.7% on the month. For the Toronto CMA, starts in January were 40,166

units, up 54.7% from December.

     Building permits data released by Statistics Canada on Wednesday showed an

8.0% increase in December from November for the residential sector. Again, in

the Toronto-Vancouver picture, permits were down 9.4% in the Toronto area after

falling 5.2% in November, for a 12-month decrease of 12.0%. For the Vancouver

area, permits soared 38.9%, the largest monthly gain since February 2015.

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

[TOPICS: MACDS$,M$C$$$]