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Construction of new homes picked up a “mind-boggling” 13.7 per cent in March, despite expectations for a continued slide.

Housing starts rose last month to 154,700 units, at a seasonally adjusted annual rate, an increase from the 136,100 pace seen in February, Canada Mortgage and Housing Corp. said Wednesday.

Construction of condominiums in central Canada was mainly responsible for the rebound.

The surge was “mind-boggling” and puts a halt to a six-month slide in home building activity, said Millan Mulraine, economics strategist at TD Securities.

“On the surface, this was a very strong report,” he said. “… However, in the grand scheme of things, the key economic fundamental factors continue to point to further weakness in Canadian housing sector activity.”

Most of the increase stemmed from a large increase in condominiums in Ontario and Quebec, a market segment that some experts warn is volatile and in danger of being overbuilt. Urban multiple housing starts rose 28.3 per cent, to 81,500 units.

But construction of new single homes also increased, up 1.3 per cent to 46,400 units in March.

“Higher multiple starts in Ontario and Quebec were the main contributors to the rise in new construction activity in March,” said Bob Dugan, CMHC’s chief economist. “While the multiples segment experienced the largest increase, the overall boost in starts was broad based, encompassing the singles segment as well.”

Economists had expected home building to pull back again in March, to about a pace of 130,000 new units a year, seasonally adjusted.

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