Housing starts slow in January as energy slump weighs

OTTAWA – Canadian housing starts slowed in January as groundbreaking on new homes fell towards the lowest level in four years in provinces which have been hurt through the downturn within the energy sector, a report from the national housing agency showed on Friday.

The seasonally adjusted annualized rate of housing starts fell to 165,861 units last month from the downwardly revised 172,533 units in December, the Canadian Mortgage and Housing Corp (CMHC) said. The report had originally been scheduled for release on Feb. 8.

Bob Dugan, CMHC’s chief economist, said the general decline was mostly due to a slowdown in the Prairie provinces, with the six-month moving average in the area at a four-year low.

Separate data on Friday demonstrated that in Alberta, in which the country’s vast oilsands can be found, January’s unemployment rate rose to the highest level since February 1996.

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In the Prairies, including Alberta, Saskatchewan and Manitoba, starts in urban areas fell 8.9 percent to 29,273 units.

“That makes a large amount of sense given we’re visiting a pretty dramatic slowdown in housing demand in areas like Calgary,” said Robert Kavcic, senior economist at BMO Capital Markets.

Nonetheless, the general quantity of starts was weaker than expected given unusually warm winter months in areas, said Kavcic, who was simply anticipating something nearer to 190,000.

Ontario, Canada’s most populous province, was a standout with urban starts rising 12.7 per cent to 58,602 units.

“This is probably something you are going to see through 2016 where housing starts in (the Prairies) grind down a little bit further still,” said Kavcic. “On the flip side, you may be likely to see stability, if not some more strength, in areas like Toronto and Vancouver.”

? Thomson Reuters 2016