(Adds regional details, economists' comments)
By Andrea Hopkins
TORONTO Aug 11 Canadian housing starts bucked
forecasts and rose in July, data on Monday showed, but analysts
said the recent resumption of the housing market's upward drive
is likely to falter if mortgage rates rise as expected heading
Canada Mortgage and Housing Corp said the seasonally
adjusted annualized rate of housing starts rose to 200,098 last
month from a upwardly revised 198,665 units in June.
The increase in July, the fourth consecutive month in which
starts were near the 200,000 mark, topped analysts' forecasts
for 193,000. June starts were originally reported as 198,185.
The rise was driven by a 4.7 percent increase in single-unit
starts, while multiple units, typically condominiums, dipped 2.0
"Overall, housing looks to be on a slightly upward trend
again, one that could see it revert to a modest growth
contributor for a while, after posting negative contributions to
GDP growth of late," Avery Shenfeld, chief economist at CIBC
World Markets, said in a research note.
"But we have been at lofty levels relative to demographic
demand, and as a result, it's unlikely that homebuilding will be
a growth contributor in 2015."
The fourth straight month of homebuilding strength came
after a slide of nearly 10 percent in the first three months of
the year, when cold temperatures and icy conditions sideswiped
builders. Analysts say the surge is unlikely to last.
"We view the recent acceleration in starts from their local
low of 157,000 in March as consistent with both a return to
seasonal temperatures following an inclement winter and spring
and a renewed push lower in mortgage rates," David Tulk, chief
Canada macro strategist at TD Securities, said in a note.
"This latter trend should be reversed over the remainder of
the year and is expected to slow the housing market heading into
The rise in single-unit starts to a rate of 67,000 marks the
highest level since September 2012, Tulk said.
Canada's housing market has consistently defied expectations
for a slowdown or crash. Mortgage rates remain low and borrowers
are taking on near record levels of household debt to get into
July's strength was led by housing starts in Ontario, the
country's most populous province, and in Atlantic Canada, the
smallest regional market, with declines elsewhere.
(Additional reporting by Leah Schnurr Editing by W Simon; and