Toronto, Ontario, February 8, 2006--New home construction started the year on a strong note, up 6.6 percent in January, but the Canada Mortgage and Housing Corp. said higher mortgage rates will cause building activity to moderate this year.
Housing starts rose to a seasonally adjusted annualized rate of 247,900 units from a revised 232,600 units in December, the agency said on Wednesday.
The number of January starts beat the average expectations of analysts who had called for 224,000 starts.
December's tally was originally reported at 227,700 units.
"Despite this strong opening, we expect the level of activity to moderate in 2006 compared to 2005, as higher mortgage carrying costs due to strong house price growth and modest increases in mortgage rates will contribute to ease the demand for both existing and new homes," Bertrand Recher, senior economist at CMHC, said in a statement.
Urban singles starts jumped 14.3 percent to 111,800 units in January from December, while urban multiples rose 2.4 percent to an annual rate of 103,500 units.
Rural starts in January were estimated at an annual rate of 32,600 units from 33,700.
