TORONTO - Building permits rebounded unexpectedly in July, rising 1.8 per cent to $6.4 billion but the story remains that the Canadian housing market is "coming off the boil," say analysts.

The surge in permits was mainly due to multi-family dwelling permits in Central Canada and industrial construction intentions in Saskatchewan, Statistics Canada reported Monday.

The value of building permits rose 2.7 per cent in the residential sector, to $3.7 billion as multi-family dwelling permits rose in Ontario, Quebec and Manitoba.

The numbers were "certainly... stronger than (financial) markets were expecting," said Craig Alexander, TD Bank's deputy chief economist.

"The general consensus was that we would probably see building permits continue to decline given the signs that we've been getting, a cooling in the Canadian housing market," he said in an interview Monday.

However, "I don't think it (the rebound) changes the story very much," said Alexander. "The Canadian housing market is coming off the boil."

At the same time, though, "it is... somewhat reassuring that it's not falling off a cliff."

Despite the upbeat building permit report, the housing market across Canada is "definitely" slowing, said Douglas Porter, an economist with BMO Capital Markets.

"When you look at things like sales, they've come down almost across the country in double digit terms especially in most of the major cities," he said. "That has left prices barely above year-ago levels in most cities."

As well, he said, the report "puts a little bit of upside risk on tomorrow's housing start report" for August from the Canadian Mortgage and Housing Corp.

"We may see a bigger bounce back than what the markets had expected" in housing starts for August, he said,

Last month, CMHC reported that July's annual rate of housing starts was 186,500 units, down from 215,900 units in June.

Meanwhile, national Multiple Listing Service figures released by the Canadian Real Estate Association indicated that the average price of a resale home was $302,298, down from $309,885 in July 2007.

On Monday, Statistics Canada reported that the value of building permits edged up 0.6 per cent in the non-residential sector, to $2.7 billion.

An increase in industrial construction intentions more than offset declines in both commercial and institutional permits.

"The main point here," said Porter, "is that the construction sector is still holding up well."

"We had a sign of that from last Friday's job report which showed another big increase in construction payrolls," he said.

This upbeat building permit report "shows there is still quite a bit of underlying strength in both residential and non-residential construction."

On Friday, Statistics Canada reported that there were 15,200 more Canadians working in August than the previous month, keeping the unemployment rate at 6.1 per cent.

Nationally, the beleaguered manufacturing sector added 13,800 employees, it said, with areas of strength including construction, utilities, education and accommodation and food services.

Municipalities issued $1.5 billion worth of permits for multi-family housing in July, up 9.6 per cent from June, after two straight monthly declines.

At the same time, single-family permits declined 1.4 per cent to $2.2 billion, with Ontario accounting for more than half of the decline.

Municipalities approved 19,518 new residential dwellings in July, up 12 per cent.

Following a volatile pattern, the value of industrial permits increased 26.3 per cent to $503 million, following a 29.4 per cent decline in June.

Construction intentions for commercial buildings declined 3.7 per cent to $1.5 billion.

After three straight monthly increases, the value of institutional permits decreased four per cent to $759 million, mainly as a result of declines in permits for health buildings in Ontario, Alberta and Quebec.

The value of building permits increased in six provinces in July. The most significant increases occurred in Quebec (up 13.2 per cent to $1.3 billion)