Building permits surprise with January drop

The value of building permits fell unexpectedly in January, slipping below the $6-billion mark for the first time since April 2007, Statistics Canada said Thursday.

Canadian municipalities issued $5.9 billion worth of building permits for January, down 2.9 per cent from the $6 billion in permits issued in December 2007. 

It was the indicator's third straight monthly drop, Statistics Canada said. Analysts had expected permit values would increase by about one per cent.

A drop in residential construction permit values outweighed an increase in the non-residential sector, the agency said.

The report provided further evidence that Canada's housing market is losing some of its steam. The Canadian Real Estate Association has already reported that January home sales in the country's 20 biggest markets were down eight per cent year-over-year. Average resale prices, while still rising, are not growing as fast as they had been in 2007.

"Despite the recent declines, building sites should remain busy in the first part of 2008, since construction intentions were strong in 2007," Statistics Canada added. "Building permits are a leading indicator for construction activity."

Residential sector permits dropped by 13.9 per cent to $3.3 billion, due to a 26.9 per cent drop in multi-family housing. Building intentions also decreased in the single-family component, dropping by 5.4 per cent.

Non-residential construction, which includes commercial, industrial and institutional building projects, ended two months of declines. Permits in the sector rose by 16.4 per cent to $2.5 billion.