September 9, 2009 / 12:36 PM / 10 years ago

UPDATE 1-Canada housing starts jump 12.1 pct in August

* Aug starts rise to 150,400 units vs forecast of 139,000

* Multiple dwellings rise by 23.8 pct, singles up 2.5 pct

* Housing more affordable for the 5th straight quarter-RBC (Adds details, commentary, byline)

By Ka Yan Ng

TORONTO, Sept 9 (Reuters) - Canadian housing starts jumped 12.1 percent in August, the fastest pace this year, in a sign that construction of new homes was gaining momentum, data released on Wednesday showed.

The number of groundbreakings climbed more than expected to a seasonally adjusted annualized rate of 150,400 units in August from an upwardly revised 134,200 units in July, the Canada Mortgage and Housing Corp said.

Analysts had expected starts to rise to 139,000 units. July starts were previously reported at 132,100 units, and marked a break in a two-month run of gains.

The seasonally adjusted annual rate of urban starts increased by 14 percent to 131,800 units in August. Starts for single family homes rose 2.5 percent to 54,200 units, while new construction for multiple dwellings such as condos and apartment buildings increased by 23.8 percent to 77,600 units.

“The rebound in residential construction activity in August is further evidence that the Canadian housing sector is in recovery mode,” said Robert Kavcic, an economist at BMO Capital Markets.

The additional evidence that the domestic economy was on the mend helped the Canadian dollar CAD= touch a session high. For more see [ID:nN09321100].

New residential construction was higher in all regions, led by a 56.0 percent jump in British Columbia. Rural starts in August were estimated at an annual rate of 18,600 units.

MORE AFFORDABLE

Home ownership in Canada became more affordable for a fifth straight month but will probably level off as prices have risen in many areas, a study by RBC Economics showed on Wednesday.

The report found that measures fell at the national level by 0.4 percentage points for standard condominiums and 0.6 percentage points for two-storey homes, detached bungalows and standard townhouses.

The index measures the proportion of pretax household income needed to service the cost of owning a home. The lower the measure, the easier it is to afford a home.

While low interest rates and falling home prices drove affordability in the past year or so, the turning point seems to have arrived, RBC said.

“The leveling off of home affordability is not expected to stop the impressive resurgence in the housing market,” said Robert Hogue, senior economist at RBC. “Supply of properties for sale is dropping as demand bounces back, which is working to heat up prices again in many parts of the country.”

Recent data has shown a stunning rebound in resales of homes, prompting the Canadian Real Estate Association to revise up its 2009 forecast for sales of previously owned homes and average home price. [ID:nN27100908] (Editing by James Dalgleish)

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