Canadian Housing Starts Perk Up

Canadian housing starts showed welcome signs of improvement in May, rising to 128,400 annualized from April’s 117,600. The increase was broadly based across building types. Both urban singles starts and urban multiples starts rose 11.1% to 60.900 annualized and 46,900, respectively. Rural starts remained unchanged at 20,600 annualized units.

The improvement was reasonably broad-based, with all regions posting gains except British Colombia. Ontario enjoyed the largest percentage gain, up 22%, with gains in the Prairies posting a 16.8% increase. Quebec and Atlantic Canada enjoyed more muted gains of 3.3% and 7.3%, respectively. British Columbia suffered a 5% decline in urban starts during May.

The pick-up in starts is broadly in line with our forecast of an improvement during the latter half of the year relative to the weakness in the first half. We expect Canadian housing starts to average 141,000 in 2009 overall. As growth in the economy picks up in 2010, starts should improve modestly to 173,000, although this represents activity well below levels seen earlier this decade.

RBC Financial Group
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The statements and statistics contained herein have been prepared by the Economics Department of RBC Financial Group based on information from sources considered to be reliable. We make no representation or warranty, express or implied, as to its accuracy or completeness. This report is for the information of investors and business persons and does not constitute an offer to sell or a solicitation to buy securities.