Canada's red-hot condo market was behind a huge jump in housing starts last month, Canada Mortgage and Housing Corp. said Tuesday.

Housing starts surged almost 20 per cent from August's level to a seasonally adjusted annual rate of 278,200 units, CMHC said. That's a 29-year high.

The multiple-starts segment was responsible for all of that growth. "The robust results achieved [in September] can be mostly attributed to increased condominium starts, which reflect strong condo sales over the past 12 to 24 months," CMHC chief economist Bob Dugan said in a statement.

But Dugan said CMHC expects that housing starts will decrease gradually between now and the end of 2008.

As prices for single homes climb to altitudes that make them increasingly unaffordable, more and more buyers have been choosing condominiums.

Urban multiple starts grew by double-digits in every part of the country. Starts of single urban homes, on the other hand, fell in every region except Quebec, where they remained the same.

BMO Capital Markets forecasts the annual rate of starts dropping to 190,000 next year as sales are hit by falling affordability, while TD Economics predicts a drop to "a more sustainable level" of 204,000.

For now, at least, the Canadian housing market is much stronger than the scene in the U.S.

"Contrasted with the heightened risk to the economy arising from the landslide taking place south of the border, the Canadian economy can still count on housing to help sustain growth in the short term," a BMO commentary said.

Ottawa, Edmonton see building boom

Compared to September 2006, housing starts across the country were up 34.7 per cent in September 2007. In fact, multiple housing starts in urban areas more than doubled.

In Ottawa, housing starts jumped 48 per cent during that period. Specifically, multi-family housing starts jumped 53 per cent and single-family detached housing starts grew 45 per cent, even as starts of single-family homes fell in other parts of the country.

Pascal-Yvan Cloutier, a senior analyst with the CMHC, said most of that growth is concentrated in suburban areas such as Goulbourn, Nepean and Gloucester, where developers have been putting up row houses. Meanwhile, inside the greenbelt, housing starts dropped between September 2006 and September 2007.

In Edmonton, housing starts were up 40 per cent compared to the year before, mostly due to condo construction. Single housing starts actually dropped from last year, with fewer than 700 such homes being built in the Edmonton area.