Housing starts improved by 5 percent in September to a seasonally adjusted annual rate of 223,808 from a revised 213,012 in August. The July figure missed Econoday's consensus expectation of 226,000.

The six-month trend for total housing starts declined 1.9 percent to 243,759 in September from 246,972 units in August.
The trend measure is a six-month moving average of the SAAR of total housing starts for all areas in Canada. The latest figures suggest housing starts remain sluggish despite loosening financial conditions.

For cities with population of 10,000 or more, actual housing starts rose 2 percent year to date from the same period last year. Growth in year-to-date housing starts has been driven by multi-unit and single unit starts in Alberta, Quebec and the Atlantic provinces. By contrast, year-to-date starts in Ontario and British Columbia are down across all housing types.

Forecasters see housing starts improving to an annual rate of 226,000 after dropping to 217,405 in August as loosening credit conditions are expected to provide support.

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.