Housing starts on the rise in Canada: CMHC

The standalone monthly seasonally adjusted annual rate (SAAR) of total housing starts for all areas in Canada increased 22 per cent in April (261,559 units) compared to March (213,780 units), according to a report released Monday by Canada Mortgage and Housing Corporation (CMHC).

Curtis Adams

The monthly SAAR of total urban starts (centres 10,000 population and over) increased 26 per cent, with 241,585 units recorded in April. Multi-unit urban starts increased 33 per cent to 201,621 units, while single-detached urban starts decreased two per cent to 39,964 units, it said.

“While both the SAAR of housing starts and the trend have returned to levels observed before the pandemic, housing starts are expected to drop significantly in 2023, before seeing some recovery in 2024 and 2025, according to our latest forecast. The expected decline is due to constraints in new construction, including labour shortages, as well as higher construction and borrowing costs for housing developers,” said Aled ab Iorwerth, CMHC’s Deputy Chief Economist.

The report said the Vancouver, Toronto, and Montreal CMAs all recorded an increase in total SAAR housing starts in April, with Vancouver up 36 per cent, Toronto up 54 per cent, and Montreal up 43 per cent. Both Toronto and Montreal recorded declines in single-detached starts that were offset by large increases in multi-unit starts, while Vancouver posted increases in both segments, it said.

“The rural starts monthly SAAR estimate was 19,974 units. The trend in housing starts was 240,403 units in April, down 0.2 per cent from 240,876 units in March. The trend measure is a six-month moving average of the monthly SAAR of total housing starts for all areas in Canada,” said the CMHC.

Rishi Sondhi, Economist, TD Economics, said starts were able to bounce back to a significant degree last month, even with winter storms taking place in some regions in early April. This boosted residential construction activity and overall economic growth during the month.

“That said, starts remain on a downtrend, evidenced by the six month moving average falling from 259.2k units in January to 240.4k units in April. Single-detached units are responsible for this decline, as sales of these homes unwound their significant pandemic-era gains last year, which is now flowing into slower construction activity,” he said.

“Moving forward, we think that starts will continue to trend lower, thanks to past declines in home sales passing through to weaker homebuilding. This will weigh on residential investment and GDP growth this year.”

Andrew Grantham, an economist with CIBC Economics, said Canadian housing starts surged to a 262K annual pace in April, well above the 220K consensus forecast and a welcome break from the general weakening trend seen since last November.

“However, looking through the usual monthly volatility, the six-month average held broadly stable at 240K. Moreover, the surprise acceleration in April was fairly narrowly based, driven largely by a pick-up in multiples (+32 per cent) and in Ontario ( +48 per cent), which suggests that starts could decelerate again next month. Single family starts were lower nationally in April relative to the prior month. Even if April’s pace of housing starts were maintained, it may still not be enough to ease supply pressures given the rapid population growth seen recently,” he said.

Mario Toneguzzi

(Mario Toneguzzi is Managing Editor of Canada’s Podcast. He has more than 40 years of experience as a daily newspaper writer, columnist, and editor. He worked for 35 years at the Calgary Herald, covering sports, crime, politics, health, faith, city and breaking news, and business. He works as well as a freelance writer for several national publications and as a consultant in communications and media relations/training. Mario was named in 2021 as one of the Top 10 Business Journalists in the World by PR News – the only Canadian to make the list)