Canada: Housing starts edged down in April but still strong - NBF

According to Kyle Dahms, analyst at National Bank of Canada, explains that Housing Starts slowed in April but the number continues to be high on a historical basis.

Key Quotes:

“Housing starts edged down in April to an annualized 214.4K units (top chart). Urban starts were down 9.8K (to 198.1K) as groundbreakings dropped in both the multiple (-3.9K to 141.0K) and single units categories (-5.8K to 57.1K).”

“Housing starts weakened in April but remain relatively strong on a historical basis.”

“After having contributed to residential investment in the last half of 2017, the current trend may translate into a negative contribution to growth from residential construction in the first half of 2018.”

“Residential construction could be restrained by rising interest rates and more rigorous rules for mortgage lending (B-20 regulations). That being said, the effects should mostly be seen in the urban-single starts with continued buildup in the multiple category which tends to be more affordable.”

“A strong labour market and favourable immigration flows should continue to provide the necessary support for demand and keep housing starts slightly above levels consistent with demographic needs (i.e. around 190K).”