Bloomberg News

Canada Housing Starts Rise 7.3% on Multiple-Unit Projects

October 11, 2011

(Updates with economist comment in fourth paragraph.)

Oct. 11 (Bloomberg) -- Canada Mortgage & Housing Corp. said new housing starts rose in September on a jump in multiple-unit projects.

Starts rose 7.3 percent to 205,900 units at a seasonally adjusted annual pace, the Ottawa-based agency said. The August figure was also revised to 191,900 from 184,700. Economists forecast a September reading of 190,000, according to the median of 19 responses to a Bloomberg News survey.

Demand for homes has been fueled by low borrowing costs, with the average five-year fixed mortgage rate at 5.19 percent in the last two weeks of September, matching a low set in November. Further gains may be restrained by tighter mortgage requirements imposed by regulators in response to record levels of consumer debt.

“While the prevailing environment of low interest rates will provide additional support to the housing market, the exhaustion of pent-up demand is nevertheless expected to translate to a slower pace of activity,” David Tulk, chief Canada macro strategist at Toronto-Dominion Bank’s TD Securities unit, said in a note to clients.

In urban areas, multiple-dwelling starts increased 14 percent to 118,000 units, on gains in British Columbia, Quebec and on the east coast, CMHC said today. Single-family projects fell 1.5 percent to 67,900 units.

--Editors: Paul Badertscher, Christopher Wellisz

To contact the reporter on this story: Greg Quinn in Ottawa at gquinn1@bloomberg.net

To contact the editors responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net; David Scanlan at dscanlan@bloomberg.net.


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