Housing starts down slightly in Toronto

Housing starts in the Toronto area slipped slightly in January as highrise construction slowed at the beginning of the year.

Starts dropped by 0.5 per cent to a seasonally adjusted and annualized rate of 20,700 units, according to figures released by the Canada Mortgage and Housing Corporation on Monday.

“Total starts in Toronto were again weighed down by muted new highrise construction,” said Shaun Hildebrand, CMHC’s senior market analyst. “The complexity and size of projects coming on stream combined with previously tight financing have resulted in longer preparation times.”

Actual starts were down by 6.5 per cent compared to a year earlier, but the CMHC expects starts to pick up during the year.

In contrast, housing starts across Canada rose by 5.8 per cent to 186,300 annualized units according to the federal housing agency.

Canadian residential activity rose to its highest level since October of 2008. And despite the dip in the Toronto market, it was also ahead of market consensus.

“The new homes market is slowly coming back to life and may finally be benefiting from the resurgence in overall Canadian housing market activity,” said Millan Mulraine, an economics strategist with TD Securities.

However, such an uptick in activity could be a result of temporary factors such as building for the Olympics, cautions the bank. Starts were up by 19.8 per cent in British Columbia alone.

“We believe that the report overstates the true strength of the recovery in residential construction and expect to see a modest pull back next month,” said Mulraine.