TORONTO, Feb 9 - Canadian housing starts fell in January, but should rebound in coming months as recent interest rate cuts take effect, Canada Mortgage and Housing Corp. said on Monday. Housing starts last month declined to a seasonally adjusted annual rate of 195,500 units from a revised 219,400 units in December, missing the consensus expectations of analysts who had called for 215,000 starts. The December figure was revised up from 217,600. CMHC said low interest rates, which have driven the housing boom over the past year, should continue to help new construction, as should strong labor markets. "January's mortgage rate reductions will boost new home sales but it will take a few months before this is reflected in starts," CMHC Chief Economist Bob Dugan said in a statement. The Bank of Canada cut its trend-setting overnight rate on Jan. 20, with a knock-on effect across the economy. CMHC said urban singles housing starts fell 7.9 percent to 95,300 units, while urban multiples fell 15.4 percent to an annual rate of 74,600 units.
Urban starts fell hardest in Ontario and the Atlantic provinces, and declined in all regions except British Columbia. Rural starts in January were estimated at 25,600, a 7.6 percent retreat from December. Housing has enjoyed a boom in the past year as rock-bottom interest rates convinced many would-be renters to take advantage of cheap mortgages. CMHC said last week it expects new home construction to decline in 2004, but stay at a high level. On a year-on-year basis, actual starts increased 7.5 percent compared with January 2003, as a 4 percent drop in single starts was outweighed by a 21.1 percent increase in multiple starts. ($1=$1.33 Canadian)//