Housing starts rose in October, despite a drop in the pace of construction of single-family homes, Canada Mortgage and Housing Corp. reported Wednesday.

The overall annualized rate of housing starts came in at 223,200 units in October, up from 209,000 units in September, CMHC said. That was slightly above the consensus estimate of 215,000 starts.

"The rise in housing starts in October reflects a rebound in the volatile multiple starts segment, which registered a two-year low in September," said Bob Dugan, chief economist at CMHC's market analysis centre. "Single starts, the bellwether component of the new home market, fell to their second-lowest level of the year."

Multiple starts are multi-unit buildings such as condominiums.

"Despite the increase in October, the pace of housing starts has been slower since August compared to the first half of 2006. This is consistent with our view that residential construction will decrease gradually between now and the end of 2007," Dugan said.

Private sector economists agreed. "Despite the strong October headline number, the Canadian housing sector is moderating owing to below-potential U.S. growth, waning affordability across much of the country and growing inventories of unsold homes," said BMO Capital Markets economist Bart Melek. 

Still, compared with the U.S. market — where housing starts are down 11 per cent — the Canadian housing market remains relatively healthy.

The seasonally adjusted annual rate of urban starts increased 8.3 per cent to 191,700 units in October compared to September, CHMC said. Urban multiples rose 23 per cent to 99,900 units in October, while singles decreased 4.2 per cent to 91,800 units.