UPDATE 2-Canada housing starts slip in April, latest sign of cooling

Wed May 8, 2013 10:58am EDT

Related Topics

* Biggest decline in growth seen in Atlantic Canada, Ontario

* Overall decline was as expected by analysts

By Alastair Sharp

TORONTO, May 8 (Reuters) - Canadian housing starts slipped in April from March, led in part by a pullback in Ontario condo-building, Canada Mortgage and Housing Corp said on Wednesday, in the latest report to indicate the country's once hot housing market is cooling.

The seasonally adjusted annualized rate of housing starts was 174,858 units in April, down from 181,146 in March. The March figure was revised down from the 184,028 units reported a month earlier.

The number of starts in April was in line with the average expectation of analysts polled by Reuters.

"Canadian homebuilders are facing the new reality that the decade-long housing boom has ended, and are retrenching in orderly fashion," BMO Capital Market senior economist Sal Guatieri wrote in a note.

MORTGAGE RULE CHANGES BITE

The six-month trend level in housing starts was 182,754, continuing a downward slope that began in the middle of 2012, when Canada's red-hot housing market peaked.

The slowdown began after Canada's Conservative government, concerned by warnings a bubble could be building in the property sector, tightened mortgage lending rules in July 2012.

Those changes, the fourth such move in four years, shortened the maximum length of a government-insured mortgage, making it harder for Canadians to get into an increasingly expensive real estate market.

"As expected, the trend in total housing starts continued to moderate in April," CMHC's deputy chief economist, Mathieu Laberge, said in a statement. "Recent moderation in total housing starts has been led by the multiple starts segment, particularly in Ontario."

The national multiple starts segment, which includes condos, declined by 3.5 percent, while overall urban starts in Ontario fell almost 15 percent and plunged 40.8 percent in Atlantic Canada.

Single urban starts were relatively unchanged, while rural starts were estimated at 21,330 units.

The strongest urban growth was in Quebec, which jumped 14.8 percent, and the Prairie provinces, which gained 9.3 percent.

"In light of reduced home construction activity taking place in tandem with the softening resale housing market, the broader housing sector is not expected to provide much support to economic growth in 2013," TD Economics wrote in a note.

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