Canadian Housing Starts: A mixed report - NBF

In Canada, housing starts increased in October after three months of declines. According to National Bank of Canada analyst, Jocelyn Paquet, employment will need to remain strong to keep the residential construction sector going.

Key Quotes:
 
“Housing starts strengthened in October after falling to their lowest level in two years the prior month. The improvement was due to a rebound in the multi segment in Ontario, Quebec and, to a lesser extent, British Columbia. The picture was less rosy in the single category, whose per-unit contribution to GDP is greater than multis. To be sure, single starts retreated for a fourth time in the last five months to reach a post-recession low.”

“Affordability, which has deteriorated in that segment in 11 of the last 12 quarters, is certainly an important factor explaining that trend.”

“October’s report was mixed. The good news is that starts have stabilized after a streak of monthly declines, a fact that gives hope for a quarterly increase in Q4 following three consecutive drops. Less encouraging, however, is continued weakness in Alberta and the smaller-than-expected rebound in B.C. In an environment of rising interest rates, employment will need to remain strong to keep the residential construction sector going.”