Housing starts plunged nearly 22 percent to a seasonally adjusted annual rate of 212,624 units in November from a downwardly revised 272,264 rate in October, far below expectations that had centered on 265,000 in an Econoday survey.

The six-month trend was up 0.7 percent to 257,777 after rising 0.8 percent in October.

In November, urban housing starts sank 23 percent, led by a 27 percent drop in multi-unit starts, while single-detached starts were down 7 percent. Today's data show further evidence the Bank of Canada's past rate hikes continue to impact the housing market. The central bank already acknowledged in its December policy statement that the Canadian economy was no longer in excess demand. In fact, Econoday's Relative Performance Index is currently in line with stable monetary policy.

Housing starts are expected to slow to 265,000 in November versus October's higher-than-expected 274,681 annual rate.

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.