Housing starts slow in June

Tag : construction and building
Housing starts in June slowed to an annualized 217,800– a drop from May but largely in line with economists'expectations.
The dip was a 4.3 per cent decline in residential building activityfrom a month earlier, reversing the four per cent rise in May.
Construction activity in both single homes and condos fell, withdeclines seen in all regions of Canada except Ontario. There,frenetic condo building -- a huge 30 per cent bounce from May --led to an increase of 10.8 per cent overall.
“Despite the decrease in June, total housing starts remain athigh levels.” said Bob Dugan, the chief economist at CanadaMortgage and Housing Corp. “This is mostly due to themultiple segment which has been continuously above the 100,000 unitthreshold since the beginning of the year.”
Urban starts dropped 5.0 per cent in June, with single homeconstruction falling 7.8 per cent and condo construction falling3.0 per cent, CMHC said.
The numbers are all seasonally adjusted.
Despite the slower pace of building in June, actual starts for thefirst half of 2008 rose about 1.5 per cent compared to the sameperiod last year, CMHC noted. Urban starts were up 6.1 per centcompared to the first six months of 2007, mainly on the strength ofa 23.1 per cent increase in multiples. Single homes, however, were13.1 per cent lower than a year earlier.
Economists have been warning for months that Canada's housingmarket is past its peak, and Wednesday's housing start numbersvalidate their warnings.
“A nearly eight per cent drop in the singles component is abetter gauge of deteriorating housing market conditions than themilder drop in total starts,” said economists at Bank of NovaScotia.
Earlier this week, Statistics Canada said building permits rose 1.1per cent in May compared to a month earlier, but the rise wassolely due to a big jump in non-residential constructionintentions. Residential building permits dropped 6.6 per cent fromApril.
Still, the moderation in Canada's housing market is minor comparedto the devastating plunge seen in the United States, economistssaid.
“On the whole, the Canadian housing market continues tomoderate as the pace of activity declines to levels that are moreconsistent with a balanced market, following the boom period nottoo long ago,” said Millan Mulraine, economics strategistwith TD Securities.
“However, the decline appears to be both measured andorderly, and is in no way comparable to the correction seen in theU.S.”
He said he expects housing starts to maintain their pace in themonths ahead, sticking to a range of between 210,000 and 220,000.