The jump confirmed what analysts had suspected: Despite a sharp drop in activity in June, housing remains on track for strong growth this year.
Canada Mortgage and Housing Corp. analyst Christian Douchant, who already increased his Ottawa new-home forecast by about 220 homes or six per cent earlier this month, said yesterday he might revise it upward again in October.
"We're seeing strong activity and strong sales," he said.
Ottawa's relatively strong economy, along with a "psychological" push from people buying now because they fear mortgage rates will rise, will likely keep the new home market humming for the rest of the year, he said.
Mr. Douchant's latest forecast calls for 6,600 new homes this year, which represents a 3.4-per-cent increase from the 6,381 homes started last year.
Last month's 790 housing starts showed strong activity in single family homes and in multiples, which include townhomes, condominiums and apartment units.
Both single family homes and multiples were up nearly a third compared with July, 2003, a huge rebound from June when construction of 583 housing units was down 13 per cent from a year earlier. New-home construction is up 12 per cent to 3,934 units in the first seven months of the year, CMHC said.
Ottawa's strong showing was in contrast to the national trend, which showed a slight decline. The seasonally adjusted annual rate of housing starts was 218,700 in July, down from 232,100 the previous month.
In a separate report, Statistics Canada said the asking price for new homes in June was up 6.2 per cent from a year earlier -- the steepest gain in 14 years.
The agency said the increase was supported by a favourable market and being driven by higher costs for construction materials, labour and land.
The steepest year-to-year increase was in Victoria, where prices rose 9.7 per cent, followed by Winnipeg, up 8.5 per cent and Regina, up eight per cent. Ottawa-Gatineau was fourth at 7.8 per cent, including a 1.2-per-cent increase in June.
New development fees, which apply to Ottawa building permits issued after July 14, will likely add to price pressure for homes on the Ontario side.
Ted Phillips, who represents the Ottawa Carleton Home Builders Association on development issues, estimates the higher fees could add an average of $3,000 to $4,000 to the cost of many homes and as much as $7,000 in some cases.
The average price for a two-storey home in Ottawa reached $343,500 in the first half of the year, up 10 per cent from last year, according to CMHC.
While new-home construction in Ottawa continues to post strong increases, the re-sale market fell 11 per cent to 1,204 homes in July, according to a recent report from the Ottawa Real Estate Board.
The decline represented a return to "the usual summer pattern" when sales slow down as people take their holidays, said Glenda Brindle, president of the board.
Sales through July were still about seven per cent ahead of last year, she said in a release.