Financial Post

Published: Monday, April 12, 2010

OTTAWA - Canadian home construction fell unexpectedly in March after revised figures showed more housing starts in February than previously reported.

The seasonally adjusted annual rate of housing starts decreased to 197,300 units during the month from an upwardly revised annual rate of 200,400 units in February, Canadian Mortgage and Housing Corporation said Monday. February starts were previously reported as an annual rate of 196,700 units.

"The moderation in March housing starts was due to a decrease in the volatile multiple starts segment. Helping to offset this was an increase in singles starts as well as more activity in rural areas," said Bob Dugan, chief economist at CMHC.

Analysts had expected housing starts to rise to between 197,000 and 205,000 units annualized.

"Overall, this was a softer report relative to market expectations, though the fact that the prior month was revised over the 200K mark is an encouraging sign," said Ian Pollick, portfolio strategist at TD Securities. "In addition, the outright level of starts remains healthy.

"In the months ahead, with the Canadian economic recovery expected to gain further traction, and still low (though rising) mortgage rates remaining supportive to housing demand, we expect the strength in Canadian residential construction to remain largely intact. "However, some modest moderation may occur over the coming year to better align housing market activity and starts with economic fundamentals."

CMHC said the seasonally adjusted annual rate of urban starts declined 4.2 per cent to 175,200 units in March. Multiple-unit starts fell 15.2 per cent to 77,500, while single urban starts rose 6.9 per cent to 97,700 units.

In Quebec, urban starts rose 13.5 per cent and by 7.3 per cent in the Prairie region. In British Columbia, however, starts were down 16.3 per cent, Ontario fell 15.5 per cent and Atlantic Canada declined eight per cent.

Meanwhile, rural starts totalled 22,100 units in March, up from 17,600 the previous month.

Housing starts seasonally for February (revised) /March (preliminary) 2010:

Canada, all areas 200,400 / 197,300

Canada, rural areas 17,600/ 22,100

Canada, urban centres 182,800/ 175,200

Canada, singles, urban centres 91,400/ 97,700

Canada, multiples, urban centres 91,400/ 77,500

Atlantic region, urban centres 10,000/ 9,500

Quebec, urban centres 41,500/ 47,100

Ontario, urban centres 70,500/ 59,600

Prairie region, urban centres 34,400/ 36,900

British Columbia, urban centres 26,400/ 22,100

Source: CMHC