Canadian housing starts dropped to 213,000 in November, economists were expecting about 230,000 units.

“Despite the decline in the rate of housing starts in November, the high level of activity continues to reflect a robust pace of housing construction across the country,” says Bob Dugan, chief economist at Canada Mortgage and Housing Corp.’s Market Analysis Centre.

RBC Financial seconds that opinion, saying “the level of housing starts remains exceedingly high, and well within the plus-200,000 range generally seen over the past year. Second, the details underlying today’s numbers were very positive. In particular, single detached starts, the more stable indicator of housing demand, was up by 3.5% with the increase reflected in all regions of the economy. Multiple starts, which have carried much of this year’s momentum, fell by 25.2%, with most the declines registered in Ontario.”

“Nevertheless, given today’s housing starts decline from elevated levels, residential construction will be hard-pressed to repeat its excessively strong contribution to economic growth in the fourth quarter. Indeed, looking ahead to next year, we expect that housing activity will continue to see moderate declines from the lofty heights reached this year, especially among multiple unit construction,” RBC says. “That being said, housing demand will still remain fundamentally well supported, both by solid affordability and rising employment.”

BMO Nesbitt Burns notes that, “Even with the stumble in November, nationwide starts are on track to hit 220,000 units this year. This would represent the strongest year for Canadian homebuilders since the boom year of 1988.”

“The Canadian housing market may be finally losing a bit of steam, but it is still very hot by any standard,” Nesbitt concludes. “The rise in rental vacancy rates may crimp new construction of multiple unit buildings in 2004, but single-family starts look to remain very strong, with interest rates going nowhere fast and employment growth starting to crank up again. On balance, we would look for overall starts to stay just above 200,000 units in 2004.”