Bldg. Permits, Housing Surge in Canada

Canadian housing starts climbed in June as groundbreaking on multiple unit urban homes hit a record high, and building permits for May also jumped, reflecting renewed strength in housing after a weak spring, separate reports showed on Tuesday.

Figures released Tuesday by Canada Mortgage and Housing Corporation showed construction starts on homes blew past expectations in June, increasing to 248,138 from May's downwardly revised 193,902, on strength in multiples - for the most part, condos.

Economists had forecast starts would rise to a seasonally-annual adjusted rate of 210,000 homes in June.

Mortgage stress-tests imposed in January by Canada's big banks dampened home sales, adding to higher mortgage costs and a series of government measures aimed at cooling the long housing boom in the biggest cities, Toronto and Vancouver.

The Bank of Canada has raised interest rates three times since last July, and another rate hike is likely to come on Wednesday.

But Canada's condo market has remained robust, in part because buyers have been priced out of more expensive single-family homes.

The CMHC report showed a 46% surge in multiple-unit urban starts, eclipsing a 4% decline in groundbreaking on single homes.

A separate report from Statistics Canada showed the value of Canadian building permits rose 4.7% in May from April as strong intentions to build houses outweighed weakness in the non-residential sector. The gain erased April's 4.7% decline.

The value of residential permits rose 7.7% in the month, the second-highest level on record. Five provinces posted an increase with Ontario and British Columbia reporting the largest gains.

The value of permits for multi-family dwellings climbed to a record high, while the value of single-family building permits rose for the first time in five months.

Permits for non-residential structures fell 0.7%.