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A surge in multi-unit dwellings such as condos explained most of the increase in home construction, the CMHC said. (Colleen Underwood/CBC)

The pace of new home construction in Canada picked up in September, despite a slowdown in the country's most populous province.

The Canada Mortgage and Housing Corporation said Tuesday that the seasonally adjusted annual rate of starts was 220,617 in September, up from 184,201 units in August.

Multiple-unit dwellings such as condos were the biggest contributor to the increase, especially in Quebec.

Multi starts increased by 22 per cent. Single family homes were up a still solid 15 per cent.

Quebec saw the largest gain in housing starts last month, due to the development of new rental apartments for seniors. There were also increases in British Columbia, the Prairies and Atlantic Canada.

Ontario bucked the trend however, with the construction pace falling to 67,426 housing starts in September, from 70,262 units in August. That was mainly due to a decrese in the biggest city, Toronto, where the seasonally adjusted rate dropped to 30,232 units from 40,406.

"Low inventory, sharp home price gains and a relatively balanced housing market suggest that the pace of new home construction over the last year might be just right," TD Bank economist Diana Petramala said of the numbers.