Canadian housing starts fell for a second month in October on declines in both single-family and multiple-unit projects.
Work slowed to an annual pace of 204,107 units from a revised 223,995 in September, or by 8.9 percent, Ottawa-based Canada Mortgage & Housing Corp. said on its website today. Economists forecast a reading of 210,000 according to the median of 21 responses to a Bloomberg News survey.
The country’s central bank forecast that housing investment, which helped lead Canada out of recession in 2009, will become a drag on growth next year and in 2014. Bank of Canada Governor Mark Carney told lawmakers last week that record household debt burdens are the main domestic risk to an economic expansion and there have been recent “mixed signals” about the housing market’s strength.
“It’s a pretty safe bet that housing starts slow further from here,” said Robert Kavcic, a Bank of Montreal (BMO) economist in Toronto. “It gets pretty interesting now because housing was the strongest pillar of growth for the economy in Canada for the last year or two,” Kavcic said.
Multiple-unit starts in urban areas fell 11.4 percent to 119,732. Single-family starts declined 7.6 percent to a pace of 62,402 units, the lowest since March 2011, according to the CMHC report.
Canada’s mortgage market will also be “volatile” over the next few months after the introduction of tighter federal lending regulations, Carney told the Senate banking committee Oct. 31. He also reiterated that monetary policy is the “last line of defense” to guard against household imbalances.
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