Canada’s homebuilders scale back – Housing starts dropped sharply in January, far below expectations, notably in Toronto’s condo market

February 11th, 2013

Friday February 8, 2013

Byline: Tara Perkins

Canadian housing starts dropped sharply in January, coming in far below expectations, as homebuilders scale back, notably in Toronto’s condo market.

The number of starts sunk to 160,577 units during the month, down from 197, 118 in December, Canada Mortgage and Housing Corp. said Friday.

In Toronto the figure came in at 16,800 units for January, compared to 49, 800 in December.

“Home building, especially in multiunit starts, slowed in January after experiencing elevated levels of condominium apartment starts throughout 2012,” stated Shaun Hildebrand, senior market analyst for Toronto at CMHC. “Housing construction in 2013 is expected to remain lower than last year, but should continue to receive some support from strong preconstruction condo sales activity in late 2011 and early 2012.”

Canadian Imperial Bank of Commerce economist Emanuella Enenajor noted that the national figure of 160,577 starts during January was “miles shy” of the consensus expectation of economists for 195,000 starts during the month.

“While the series can be volatile during the winter months, particularly as December’s reading may have been supported by warmer-than-normal temperatures, the sheer scale of the drop points to an acute weakening in the homebuilding sector, consistent with the slowing trend in residential building permits seen in recent reports,” Ms. Enanajor wrote in a research note. “Today’s data suggest homebuilding is set to swing from an economic positive in 2012 to a drag in 2013.”

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