Canada’s new home construction is on the rise, showing our real estate market is regaining momentum
The Canadian dollar rose against the majority of its most traded peers as a report showed new home construction increased more than forecast in May, adding to evidence the housing market is regaining momentum.
Canadian housing starts rose at their fastest pace in more than a year in May on a surge in condominium construction, Ottawa-based Canada Mortgage & Housing Corp. said on its website Monday.
The currency rose for a third day against its U.S. counterpart after its biggest gain in a year and a half versus its U.S. peer last week as a surge of hiring in construction led to Canada posting its biggest jobs gain in a decade in May. Canadian housing starts were 200,178 units at a seasonally adjusted annual pace in May, according to the Ottawa-based Canada Mortgage & Housing Corp.
“May’s increase in homebuilding suggests overall housing construction continues to garner support from condominium-related building, although the overall levels are still off from the highs seen in mid-2012 when the market was more frothy,” said CIBC World Markets economist Emanuella Enenajor.
“Today’s data could mean that homebuilding activity in the second quarter could be less of a drag than seen in the prior quarter.”
Housing-market data are showing few signs of a sharp correction even amid warnings from analysts and policy makers that a bubble may have been forming. Finance Minister Jim Flaherty tightened mortgage rules for a fourth time last year on concern that an overbuilding of condos could lead to sharp price declines. Former Bank of Canada Governor Mark Carney identified record household debt as the biggest domestic risk to the economy.
The loonie rose 0.1% to C$1.0184 per U.S. dollar at 8:19 a.m. in Toronto. One loonie buys 98.19 U.S. cents.
Economists forecast a reading of 179,100 housing starts, according to the median of 18 responses to a Bloomberg News survey.
Home construction, which helped lift Canada’s economy out of recession, has been a drag on growth over the past year, according to Statistics Canada data. Construction fell in the first quarter at an annualized 4.7% pace, the third- straight drop, the Statistics Agency reported May 31.
Multiple-unit housing starts in urban areas rose 22.2% in May to a pace of 114,346 units, according to the CMHC report, while single-unit work increased by 3% to 62,888 units.
Source: Ari Altstedter, National Post Wire Services
