TORONTO - Canadian housing starts held steady in September, but with noticeable weakness in Ontario and worries about national shakiness ahead.
Last month's new home construction, running at an annualized rate of 217,600 units, was up a slight 200 units from August, according to data from Canada Mortgage and Housing Corp. It cited strong activity in the multi-unit segment.
However, the seasonally adjusted rate of urban starts fell 6.6 per cent in Ontario, while rising 9.3 per cent in British Columbia and increasing or staying unchanged in the rest of the country, the CMHC figures showed.
The B.C. surge "is somewhat surprising, and again highlights that this month's report is not a good indication of where things are headed for residential construction in Canada," commented TD Bank economist Pascal Gauthier.
"With existing home prices signalling significant weakness ahead, in particular for B.C. and Alberta, starts are likely to come off significantly, we think by about 15 per cent nationally, in the year ahead."
Meanwhile, economists at the Royal Bank of Canada reduced their expectations for economic growth, while saying the domestic economy "remains firm."
Canada's largest bank now projects national growth this year of 0.9 per cent, down from its previous prediction of 1.4 per cent.
It cites "the persistent turmoil in financial markets and disappointing economic trends over the past two quarters."
For 2009, the report sees a modest revival in gross domestic product with a growth rate of 1.5 per cent.
"The continued weakness in the U.S. economy is expected to dampen growth in Canada," said Craig Wright, RBC's chief economist.
"However, this pressure on our growth will be tempered by strong commodity prices which are contributing to robust export revenues and providing support to Canadian domestic spending via a boost to incomes."
The report notes that Canada's housing market "is showing signs of coming off the boil" after almost a decade of high activity.
"However, any weakening is expected to be more moderate compared to the U.S. experience as Canadian mortgage markets did not see the excesses that afflicted the U.S. housing sector," RBC says.
It also notes "fatigue" in the labour market, with net job gains of only 87,000 in the first eight months of this year, after 320,000 new positions on average each year from 2002 to 2007.
