Canada’s seasonally adjusted housing starts fell faster-than-expected in April, dropping 11.3%.

The number of starts slipped to 184,500 units, according to Canada Mortgage and Housing Corp.

However, Bank of Montreal notes that the drop came off an upwardly revised annualized level in March of 208,000 units. March represented a 10-year high. “The resulting level for April of 184,500 still represented very strong activity,” says BMO. “A number of factors are likely to contribute to continuing strong residential investment activity. Mortgage rates remain low despite generally drifting higher since the start of the year. Employment growth has also been very strong over the first three months of this year.”

BMO Nesbitt Burns points out that, “The details of the latest report were also far from weak. The bulk of the decline in April was centred in the volatile multiple unit category, which fell 17.7%. The more important single-family group slipped a moderate 6.4% from March’s 12-year high, and remains well above the trend over the past year.”

RBC Financial Group observes that Nova Scotia, New Brunswick, Quebec and Saskatchewan were the only provinces posting increases in the number of housing starts in April, while Ontario, Alberta and B.C. all posted declines.

“While Canadian housing starts were a little below expectations in April, the underlying story remains quite robust. Housing affordability has only suffered a flesh wound from the recent rise in mortgage rates, with borrowing costs still close to 40-year lows. Consumer confidence is on the mend, income and employment are posting solid gains, and home sales are on an absolute tear. The latest version of Canada’s housing boom is only getting warmed up,” concludes BMO Nesbitt.

BMO suggests that continued strong housing starts activity, “will likely reinforce the Bank of Canada’s current plans to gradually unwind the very stimulative monetary conditions”.