According to ActionForex, analysts at TD Bank Financial Group note that April was yet another in a series of strong months for housing starts in Canada, but warn they expect some moderation in starts as demand comes off the boil and interest rates rise

"In April, Canadian housing starts dropped 19.8% from March’s record high, although they still came in at a rock-solid 268.6k units. On a six-month moving average basis, starts were extremely elevated at 279.1k units."

"April’s decline in urban starts was concentrated in multi-family (-22.8% m/m) units, with the single-detached category flat on the month."

"Like clockwork, April was yet another in a series of strong months for starts. The backdrop for homebuilding remains favourable (soaring lumber prices and slow population growth notwithstanding), as housing demand is strong and prices are high. In addition, interest rates and unsold new inventories (which fell even more in April) are low. And, with building permits currently sitting at multi-year highs, further near-term gains are in store for both singles and multi-family family units."

"Moving past the near-term, we anticipate some moderation in starts as demand comes off the boil and interest rates rise. Purpose-built rental construction has been an important driver of homebuilding. For example, they accounted for 1/3rd of starts in the first quarter – matching a multi-decade high. Looking forward, an anticipated pick up in population growth should support rental demand, although soft growth in rents and high vacancy rates in several key markets present challenges."