Canadian Housing Starts: A negative surprise after two strong months - NBF

According to National Bank of Canada analyst, Kyle Dahms, the worsening in May’s Housing Starts data follows an exceptional April which saw starts trend to their highest level in over 10 months. They noted the deterioration was due to a significant decline in multi urban starts.

Key Quotes:

“Housing starts fell from 233.4K in April to 202.3K in May (seasonally adjusted and annualized.”

“The deterioration in May was due to a significant decline in multi urban starts. However, this was not too surprising given that the latter category reached an all-time high in April. In addition, building permits data from this morning indicated that the number of permits (and their value) for the multi segment increased sizeably in April which should support starts in the coming months.”

“On the flip side, single-detached starts (which contribute more to GDP on a per unit basis) rose to a five-month high but remain low on a historical basis (-21.7% year on year).”

“Looking at the quarterly perspective, after two months of data, housing starts in Canada are set to increase in Q2 after having declined in the first quarter of the year. All in all, this latest report continues to support that starts should average more than 190K this year.”