Canadian housing starts climbed by 16.5% month over month in April to a four-month high of 279,300 annualized units and beat expectations of a 245,000 print following an upwardly revised 239,700 reading in March from 235,900 initially, said Rosenberg Research.
This was the largest monthly gain in a year, as activity on the supply front is slowly picking back up following a subdued winter, although the year-over-year pace is currently down 0.9%, lower from the 11.8% gain in March and 17.3% climb a year ago, noted the research after Friday's data.
Comparing this surge in starts to Thursday's existing home sales data -- sales were up just 0.7% month over month in April, and prices down 0.1% -- and you see the "clear" supply-demand imbalance, said the research.
There is so much more supply, from both starts as well as new listings, which were up 4.1% month over month in April, than demand, that home prices should continue their 15-month streak of declines, it added.
Rosenberg Research said this combination will support disinflation in the shelter component, which accounts for nearly 30% of the consumer price index, and is why it continues to believe the priced-in Bank of Canada tightening path doesn't fully align with the underlying macro environment, once the oil shock is resolved.