Canada: Housing Starts decline in September – NBF

Kyle Dahms, analyst at National Bank of Financial, suggests that although Canada’s housing starts declined a touch in September, they remained slightly above consensus expectations and continue to confirm that the Canadian housing market has stabilized.

Key Quotes

“The slight deterioration in September stemmed from a 4.9K pullback in the single-detached category after a substantial bounce of +7.3K in the prior month.”

“After having reached their lowest level on record in February, single starts are still holding at their second highest level this year. Starts in the multi segment of the market stayed relatively unchanged in the month as demand for affordable housing continues to keep the category near record highs. If the residential permit data released this morning is anything to go by, there could still be upside in both singles and multis.”

“Over the past 6 months, permits have averaged 58.4K for single-detached dwellings (vs. 47.8K starts) and 177.3K for multiples (vs. 163.8K starts). Looking at quarterly data, starts posted a marginal decline in Q3 after a massive progression in Q2 (+19.4%).”

“At first glance, this could suggest that the contribution to third quarter GDP growth from residential construction will be subdued but a closer look at the sector breakdown looks more promising. Indeed, single starts rose 7.7% in Q3, while multis posted a 3.5% decline.”