Strength in residential building permits bodes well for housing starts

The value of building permits issued in January slipped 4.9 per cent, to $5.7 billion, as nonresidential construction permits fell 21 per cent, to $1.7 billion, Statistics Canada reported Thursday.

Economists had called for an 0.8-per-cent month-over-month gain in building permits, an indication of future construction activity. However, the value of residential building permits issued rose 4.1 per cent to $4 billion, almost twice the value registered in January 2009, and driven largely by a 7.2 per cent in intentions for single-family homes, the federal agency said.

January's figures were still 32.7 per cent higher than in January 2009, Statistics Canada said.

"While building permits have declined now for three consecutive months -- incorporating this morning's revisions -- almost all of the weakness has been on the non-residential side, with residential permits up in two of the past three months," said Scotia Capital economist Karen Cordes.

"And, when you strip out prices and look solely at the volumes side of the picture, the story is even better on the residential front, with gains in each of the past six months. This bodes well for next week's housing starts report and suggests we will see further gains on the supply front over the next few months."

December's report was revised down from an advance of 2.4 per cent to a decline of 2.7 per cent.

The total value of building permits fell in five provinces, led by Alberta and British Columbia -- with Alberta falling 28.5 per cent to $876.5 million and B.C. falling 22.5 per cent to $684.6 million.

In Alberta, the decline was attributed to lower intentions for commercial buildings and multi-family dwellings, while in B.C. the decreases came from both the residential and non-residential sectors.

Ontario posted the largest dollar-value gain, up 6.9 per cent to $2.31 billion, as a result of strength in both the residential and non-residential sectors, while in Quebec, strength in the residential sector drove a 10.7-per-cent advance to $1.25 billion.

The total value of permits fell in 18 of 34 census metropolitan areas, comprising cities and their surrounding suburban areas.

The largest declines were in Calgary (-48.5 per cent), Vancouver (-37.2 per cent) and Greater Sudbury, Ont. (-95.3 per cent). The largest gains were in Toronto (+18.3 per cent) and Montreal (+16 per cent).

(Source: Financial Post/National Post)