The housing starts trend line in Canada increased for the second consecutive month due to a healthy number of actual housing starts in July. The trend was 242,525 units, up 2.8% from 235,819 units in June, according to Canada Mortgage and Housing Corporation (CMHC). The trend measure is a six-month moving average of the monthly SAAR of total housing starts for all areas in Canada.
“The standalone monthly seasonally adjusted annual rate (SAAR) of total housing starts for all areas in Canada decreased 10% in July (254,966 units) compared to June (283,498 units), which was the strongest month so far this year. Despite the monthly drop, total SAAR housing starts for all areas in Canada was 7.4% above the 5-year average,” said the federal agency.
“The monthly SAAR of total urban starts (centres 10,000 population and over) decreased by 11%, with 234,857 units recorded in July. Multi-unit urban starts decreased 12% to 193,446 units, while single-detached urban starts decreased 4% to 41,411 units.”
The report said the Vancouver and Toronto CMAs saw decreases in total SAAR housing starts in July, with Vancouver down 23%, and Toronto down 29%. In contrast, the Montreal, Calgary, and Edmonton CMAs recorded respective increases of 12%, 33%, and 67% in total SAAR housing starts. The rural starts monthly SAAR estimate was 20,109 units.
“Despite a decrease in the SAAR of housing starts relative to last month, July saw a healthy number of actual housings starts from a historical perspective. This pushed the trend of housing starts upward for the second consecutive month. Market intelligence suggests multi-unit projects started in June and July were likely financed a few months prior, so, the effect of the most recent interest rate hikes on housing starts remains to be seen,” said Bob Dugan, CMHC’s Chief Economist.
Rishi Sondhi, Economist with TD Economics, said even with the decline from June’s lofty pace, starts held at a firm level last month.
“Smoothing through the typical volatility associated with the data by looking at the 6-month average shows that starts remain well above pre-pandemic levels, and have picked up some steam in recent months. That said, they are well off their peaks from late last year, driven by lower construction of single-detached units,” said Sondhi.
“Moving forward, we think starts will trend lower, as last year’s multi-year lows for home sales feed through into weaker homebuilding. This would be consistent with building permits, which are pointing to a much lower pace for starts.”
Katherine Judge, Director & Senior Economist at CIBC Capital Markets, said the pace of homebuilding cooled under the weight of higher interest rates.
She said the softer trend to building permits this year suggests that building will come under more pressure ahead, with demand being thwarted by high interest rates.
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 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)
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