Canada's construction boom continued in July, but Canada Mortgage and Housing Corp. says it is seeing a swing away from single-family units towards cheaper condominiums, townhouses and apartments.
In its monthly report on housing starts, CMHC said the trend has been spurred by the rising price of new homes and slightly higher mortgage rates.
CMHC, a Crown agency that helps finance home purchases, said Canada's home builders started work on 236,500 units in July, up by 100 units from the strong levels of June.
Moreover, the number of new homes has risen by 3.1 per cent so far this year, compared with the first seven months of 2005. Multiple-unit starts are up by 4.3 per cent, while urban singles have risen by 0.9 per cent.
The raw numbers may look good, but they disguise a shift from more expensive single-family detached housing towards the cheaper condominiums and townhouses.
"Strong multiple starts reflect a growing interest in relatively less expensive dwellings," said Bob Dugan, chief economist at CMHC's market analysis centre.
Single-family homes have been trending down for several months, reaching their lowest level of the year in July. It is a trend that Dugan expects will continue for the remainder of the year.
"Rising prices and slightly higher mortgage rates are expected to soften the demand for new homes in the second half of 2006,” he said.
CMHC has also noticed a large discrepancy between the provinces. The housing market is booming in British Columbia — especially Vancouver — where the number of housing starts jumped by 21.9 per cent over the month before. Ontario also rose, although by a much smaller 4.2 per cent.
But starts fell by 10.5 per cent in Quebec, 9.4 per cent in the Prairies and by 2.2 per cent in the Atlantic provinces.
"The strong results achieved this past month were attributable to the performance of the multiple starts registered in Ontario and British Columbia," Dugan said, saying they made up for the declines in other regions.
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