By Ka Yan Ng TORONTO, May 10 (Reuters) - Canadian housing starts inched up 1.3 percent in April, offering further evidence that recovery in the housing sector is a major component of Canada's economic recovery. New home construction rose to a seasonally adjusted annualized rate of 201,700 units in the month from a revised 199,200 in March, Canada Mortgage and Housing Corp figures showed on Monday. The April number, however, came in below the average forecast of analysts, who had called for 205,000 starts. The March number was revised up from an originally reported 197,300 units. "This was only the second time that the pace of housing starts has breached the 200 K-units barrier since November 2008," Millan Mulraine, a senior strategist at TD Securities, said in a note. The Canadian dollar pulled back slightly after the data was released, but at C$1.0236 to the U.S. dollar, or 97.69 U.S. cents, it was still about 2 percent higher than Friday's close, surging on the back of a European rescue deal. The seasonally adjusted annual rate of urban starts rose 5.1 percent to 182,500 units as a big jump in the volatile multidwelling group offset a retreat in single-family homes. The multidwelling group, which includes high-rise condos, climbed 27.2 percent to 98,600 units. Starts in the closely watched single-family component dropped 12.7 percent to 83,900, breaking an 11-month streak of gains. Market players continue to forecast that home sales will slow in the second half of the year after a spring burst of activity due to higher interest rates, new mortgage rules and the introduction of harmonized sales tax (HST) regimes in Ontario and British Columbia. "While we are looking for further improvement in home construction across Canada through the spring months, we are more uncertain about the late summer, early fall as demand starts to retrench in the new home market in reaction to the introduction of the HST and higher borrowing costs," Scotia Capital economists Derek Holt and Karen Cordes Woods said in a commentary. Housing starts went up in most parts of the country in April, led by British Columbia, up 16.4 percent. Starts were up 6.7 percent in the Prairie region, 4.5 percent in Ontario, and 1.1 percent in Quebec. Urban starts fell 3.3 percent in the Atlantic provinces. Rural starts in April were estimated at an annual rate of 19,200. (Reporting by Ka Yan Ng; Editing by Theodore d'Afflisio and Peter Galloway) Keywords: CANADA/HOUSING (firstname.lastname@example.org; Reuters Messaging: email@example.com; 416-941-8109) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved.
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