Housing starts surged 22.3 percent in April to an annual rate of 261,559 units from a downwardly revised 213,780 in March, topping Econoday's consensus of 228,000.

Urban starts rebounded roughly 26 percent to 241,585 units, led by another increase in multi-unit starts, which were up 33 percent on the month to 201,621, while single-detached starts fell 2 percent to 39,964. The large urban centers all recorded higher housing starts in April, of 54 percent for Toronto, 43 percent for Montreal and 36 percent for Vancouver.

The six-month trend for housing starts was down 0.2 percent to 240,403 in April.

Despite April's housing starts increase, CHMC Deputy Chief Economist Aled ab Iorwerth still expects a significant drop this year owing to constraints in new construction such as labor shortages combined with higher construction and borrowing costs. The CMHC expects housing starts to recover in 2024 and 2025, which supports the Bank of Canada's scenario, where housing trims GDP by 0.8 percentage points in 2023 before contributing a positive 0.4 points in 2024.

Housing starts are expected to rise to 228,000 in April from 213,865 in March.

Released by the Canada Mortgage and Housing Corporation (CMHC), the monthly housing starts data capture the annualised number of new residential buildings that began construction during the previous month. Statistics are provided for urban and rural areas, the former with a population of at least 10,000. CMHC estimates the level of starts in centres with a population of less than 10,000 for each of the three months of the quarter, at the beginning of each quarter. During the last month of the quarter, a survey of these centres is conducted and the estimate revised.

Housing starts are a leading indicator of economic health because building construction produces a wide-reaching ripple effect. This narrow piece of data has a powerful multiplier effect through the economy, and therefore across the markets and your investments. Home builders usually don't start a house unless they are fairly confident it will sell upon or before its completion. Changes in the rate of housing starts tell us a lot about demand for homes and the outlook for the construction industry. Furthermore, each time a new home is started, construction employment rises, and income will be pumped back into the economy.

Once the home is sold, it generates revenues for the home builder and a myriad of consumption opportunities for the buyer. Refrigerators, washers and dryers, furniture, and landscaping are just a few things new home buyers might spend money on, so the economic"ripple effect" can be substantial. Since the economic backdrop is the most pervasive influence on financial markets, housing starts have a direct bearing on stocks, bonds and commodities. In a more specific sense, trends in the housing starts data carry valuable clues for the stocks of home builders, mortgage lenders, and home furnishings companies. Commodity prices such as lumber are also very sensitive to housing industry trends.