"Today's release gives some hope that after investment provided a major drag in the first quarter, there may be reason to believe that things may turn slightly higher in the quarters ahead"
- CIBC World Markets
Canada's housing starts rose to the highest level in nearly a year in May, led by an advance in multiple-unit construction, including apartments and condos. Housing starts increased to 201,705 units last month, according to the Canadian Mortgage and Housing Corp report, beating market expectations for 185,000. Overall, Canadian housing starts increased 10% to an annualized pace of 207,100 in May from April. Housing starts are a bellwether of confidence in the economy, as builders do not start a construction project unless they believe they can sell it to an interested buyer.
A separate report showed building permits also surged in the reported period for the second straight month, supported by the non-residential sector. Builders took out $7.8 billion worth of permits, up 11.6% from March, suggesting a rise in business investment after a sluggish first quarter, which is expected to be a key driver of growth in the coming months. Prices for housing in Canada continue to rise, reaching new highs in many markets as low interest rates continue to spur buying. Some experts are concerned about the potential for a steep, destabilizing correction, while others believe that is unlikely in the absence of an external economic shock of some kind.
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