The economy needs all the good news it can get its hands on just to feel well to function from day to day. Canada Mortgage and Housing Corporation provided just such an upper on Tuesday morning.
The agency told us that housing starts increased by 7.8% in December, to an annualized pace of 200, 200 units from 185, 600 in November. Market expectations going into the report had been for a reading of 185, 500, so equity markets took in this stimulus and had themselves an exciting day, gaining about 70 points.
RBC Economics said the outsized increase in the pace of housing starts was mainly due to a 14.5% increase in the volatile urban multiples component, to 111,300, from 97,200 last month. This partially retraces the 22.8% decline seen in this component in November. Urban single starts also rose, by a smaller 3.8% to 70,600. Rural starts decreased by 10.3% to 18,300.
Canada’s biggest bank also points out that the pace of housing starts in Canada picked up substantially through the middle of 2011, driven mainly by robust growth in urban multiples.
"Today’s report", the bank goes on to say, "confirmed that housing construction activity slowed in the fourth quarter, but only slightly: the average pace of housing starts in Q4 was 199, 200 units, compared to 204, 600 in Q3.
"We expect further moderation in housing starts, with our forecast calling for a pace of 185,000 in 2012 and 183,000 in 2013."
