The Canadian housing market continued to show signs of strength on Thursday as data revealed new home prices rose for the 10th straight month in January and housing starts climbed in February despite expectations the sector will slow this year.
Prices of new homes edged up 0.1% in January from December, the 10th consecutive monthly increase, mainly on strength in Calgary and Vancouver, Statistics Canada said on Thursday.
The rise matched analysts’ expectations. Compared with a year earlier Statscan’s price index was up 2.4%, slightly down from 2.5% year-on-year growth in December.
Overall, prices were up in eight regions in January, held steady in nine, and dropped in four. Calgary and Vancouver both posted 0.3% advances over December. The largest region that Statscan measures, Toronto and Oshawa, Ontario, was flat.
Housing starts rose in February from the previous month as a significant increase in multiple-unit construction in Quebec boosted the national number, Canada Mortgage and Housing Corp said.
The seasonally adjusted annualized rate of housing starts was 201,100 units, compared with 198,100 a month earlier. The January figure was revised up slightly from 197,900 units reported previously.
The number of starts was also mildly above the consensus expectation of analysts, which had called for 200,000 starts.
“Multiple housing starts in Quebec had fallen nearly 50% in January, so February’s rise can be seen as a return to a more normal rate of construction,” CMHC Deputy Chief Economist Mathieu Laberge said in a statement.
The CMHC report showed the seasonally adjusted annual rate of urban starts rose by 3.4% to 182,800 units, following a near 50% increase in Quebec. Urban starts decreased by 15.5%t in Atlantic Canada and by 16.9% in Ontario.
The strong housing data came a day after Bank of Nova Scotia forecast Canada’s housing market will cool off over the next 24 months with home sales and prices remaining near 2011 levels.
On Thursday, the Bank of Canada issued a slightly more upbeat outlook for the domestic economy, despite holding its key interest rate at an ultra-low 1%. The central bank said it expected Canada to perform better in the first quarter than it had forecast previously due to temporary factors.
“In terms of domestically, they highlight that inflation is slightly higher than they previously expected and that we have seen some firming in some of the underlying economy,” said Camilla Sutton, chief currency strategist at Scotia Capital.
(Additional reporting by David Ljunggren and Jennifer Kwan; Editing by Peter Galloway)