(Adds economist quotes and details throughout)
By Fergal Smith
TORONTO, April 19 (Reuters) - Canadian housing starts
fell more than expected in March, contributing to a slower trend
in recent months that follows a rapid increase in borrowing
costs, data from the national housing agency showed on
Wednesday.
The seasonally adjusted annualized rate (SAAR) of housing
starts fell 11% to 213,865 units from a revised 240,927 units in
February, the Canadian Mortgage and Housing Corporation (CMHC)
said. Economists had expected starts to fall to 237,800.
"The SAAR of housing starts and the trend appear to be
returning to pre-pandemic levels," Bob Dugan,
CMHC's chief economist, said in a statement.
"With interest rates remaining high, it continues to be
challenging for developers and homebuilders to get projects
started."
The Bank of Canada has lifted its benchmark interest
rate to a 15-year high of 4.50% to tackle inflation. It paused
its tightening campaign in March after eight consecutive rate
hikes.
For the first quarter, starts averaged 223,000, the
weakest quarter since the depth of the COVID-19 pandemic in
early-2020, Robert Kavcic, a senior economist at BMO Capital
Markets, said in a note.
The slowdown in residential construction could frustrate
Canadian government plans
to ease a supply shortfall and keep up with record
population growth.
"We are still seeing a historically robust level of
activity, but the downward turn is going to confound
policymakers that have been pushing for a doubling of output,"
Kavcic said.
(Reporting by Fergal Smith; Editing by Chizu Nomiyama and
Andrea Ricci)
