The value of building permits issued by municipalities surged a blistering 27.1% in June to $5.3 billion, Statistics Canada said today.

The June increase, which follows an 8.2% decline in May, forges a new monthly record and breaching the $5 billion threshold for the first time.

StatsCan said builders took out a record $3.4 billion in housing permits in June, up 24.2% from the previous month. A renewed flurry of demand for multi-family dwelling permits led the residential sector to post a new record and break the $3 billion mark for the second time.

Municipalities issued permits for $1.9 billion in non-residential building projects in June, up 32.6% from May and the highest level since August 1989. Breaking through the $1 billion level for only the second time, the commercial component propelled the expansion.

With half of the year accounted for, municipalities have issued $27.1 billion in building permits, up 9.4% from the same period in 2003, StatsCan said.

The value of housing permits issued in the first half of 2004 topped $18.0 billion, a 19.5% gain from the same period last year. Meanwhile, the non-residential sector has lagged last year’s record setting pace, with just over $9.0 billion in permits, a 6.5% decline from 2003.

Regionally, Vancouver and Montréal have shown the greatest cumulative gains thus far in 2004. While both areas saw the growth stemming from demand for dwellings, in Vancouver it was the multi-family segment that dominated, while in Montréal there was an even split with single-family homes.

In a separate release, Canada Mortgage and Housing Corp. said this year promises to be one of the strongest on record for home construction.

CMHC said Monday in its third-quarter outlook that starts are expected to hit 225,700 units, up from 218,426 in 2003, and the most since 1987.

Super-low mortgage rates are fuelling the boom. The agency noted that the five-year mortgage rate was at the lowest level since April 1951 in March of this year.

“Although rates have risen, they remain very low and together with solid employment and income gains will propel housing starts to a 17-year high,” said Bob Dugan, chief economist at CMHC.

However, rising rates will take a toll on new construction.

“As mortgage rates continue to rise next year, demand for new homes will cool and starts will slow to 204,200 units,” CMHC added.