Canadian housing starts fell to the lowest in almost two years in September, led by a drop in British Columbia, a government report showed.

Builders began work on an annualized pace of 188,683 units last month, down 5.1 per cent from August, Canada Mortgage and Housing Corp. said. It was a third straight monthly decline and the lowest since November 2016, driven by an 8.9 per cent drop in urban multiple-unit projects. Construction on new single-unit homes rose 2 per cent.

Canadian housing has been slowed this year by rising mortgage rates and tougher qualification rules, and Tuesday’s report adds to evidence the market has begun to act as a drag on economic growth.

“As these forces continue to weigh on the housing market, we see residential investment turning from a boost to a drag on gross domestic product in 2019,” Royce Mendes, an economist at CIBC World Markets, said in a research note.

British Columbia starts dropped 43 per cent to an annualized 25,611 units, the housing agency’s report showed. Vancouver starts dropped 42 per cent, and were down 56 per cent in Victoria.

--With assistance from Erik Hertzberg