Canadian housing starts surged 41 percent in June to an unexpected 281,373 annual rate for the largest change in 10 years. The gain is mostly tied to multi-unit starts which accounted for 82 percent of the month's total starts.

Multi-unit urban starts rose 59 pecent on the month to a 219,914 rate in June with single-detached urban starts up 3 percent to 42,901 units. Total urban starts rose 46 percent to 262,815. Rural starts are estimated at 18,558.

This series can be volatile but June's reading, at least for this single month, takes starts back to last summer's levels. Housing is an important factor for policy at the Bank of Canada which has described the sector as relatively strong with new construction and real estate listings lagging demand and adding to price pressures.

Housing starts are expected to rebound to a 216,000 rate in June versus May's lower-than-expected 202,494.

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.