Housing starts rose 10 percent in May to a seasonally adjusted annual rate of 264,506 units, well above Econoday's consensus expectation of 240,000. The estimate for April was little changed at 241,111 from 240,229 initially reported.

The six-month moving average for the adjusted annual rate of housing starts rose 3.8 percent to 247,830 units in May from 238,859 in April.

Total urban starts rose 11 percent in May from April to 246,111. Multi-unit starts rose 13 percent to an adjusted rate of 203,411. Semi-detached urban starts were up 2 percent to an adjusted rate of 42,970 units. Rural starts were estimated at a 18,395 adjusted annual rate.

The big movers in the latest month were Toronto, up 47 percent as multi-unit starts surged; Vancouver, on the other hand, was down 32 percent due to a drop in multi-unit starts.

Housing starts are expected to hold steady at 240,000 in May versus 240,000 and 242,000 in the two prior months.

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.