Published by Globe and Mail, in the "Report On Business" section, September 9, 2009

Housing starts across the country jump more than 12 per cent in August, driven by condominium construction.

Canada's housing and construction industry continues to bounce back sharply.

Housing starts across the country rose more than 12 per cent in August, hitting a seasonally-adjusted annual rate of 150,400, Canada Mortgage and Housing Corp. said Wednesday. That level was up from the annual rate of 134,200 in July, the agency said.

“Housing starts are trending higher, reflecting improvements in both the single and multiple segments,” Bob Dugan, chief economist of the agency's Market Analysis Centre, said in a statement. “The improvement in housing starts is consistent with our expectation of a stronger second half for 2009.”

Construction of urban singles rose 2.5 per cent from July, CMHC said, while starts on multiple units, largely condominiums, surged 23.8 per cent.

“The rebound in residential construction activity in August is further evidence that the Canadian housing sector is in recovery mode,” said BMO Nesbitt Burns economist Robert Kavcic. “While starts could follow sales even higher in the months ahead, a rebalancing of boom-time overbuilding will likely keep them below the equilibrium rate of around 180,000 through 2010.”

Construction in the western provinces was particularly strong, soaring 56 per cent in British Columbia and 16.1 per cent on the Prairies. Ontario recorded gains of 13.8 per cent, Atlantic Canada 9.6 per cent and Quebec 2.5 per cent.

Housing starts can be volatile as indicators go, at times skewed by large projects.

August's showing went well beyond what economists had projected.

Home construction is now at its highest level since last December, although, Toronto-Dominion Bank noted, it remains almost 31 per cent below where it was a year ago.

“This was undoubtedly a strong report, and it indicates that some momentum is perhaps beginning to build in the new homes market, thereby complementing the dramatic turnaround seen in the existing homes market recently,” said TD economics strategist Millan Mulraine.

“However, while we believe that the recent gains in new residential construction may be sustainable, we are unlikely to see further sharp advances in the pace of construction, particularly given the weak economic backdrop and soft labour market conditions.”