Canadian housing starts trend rose in May
By Ground Water Canada
By Ground Water Canada
Ottawa – The trend in housing starts was up slightly to 214,621 units in May 2017, compared to 213,435 units in April 2017, according to Canada Mortgage and Housing Corporation (CMHC).
This trend measure is a six-month moving average of the monthly seasonally adjusted annual rates (SAAR) of housing starts. “Housing starts trended higher in May in Canada’s urban areas,” said Bob Dugan, CMHC’s chief economist, in a news release. “Row and apartment units led the upward move, while construction has slowed for pricier single- and semi-detached houses.”
CMHC also shared monthly highlights in several cities:
Apartment construction continues to drive the residential market in Halifax with year-to-date apartment starts more than double 2016 levels. The single-detached demand is also picking up pace following a couple years of decline. Year-to date, single-detached construction has grown by 16 percent.
For the Québec area, the gradual decrease in the rate of housing starts which started at the beginning of the year continued in May. Condominium construction remains below the average of recent years and activity in the conventional rental housing segment also seems to be adjusting downward. This decline is occurring in a context where the vacancy rate is on the rise, particularly for newly built projects.
In Toronto, total starts trended lower largely as a result of a decrease in single-detached and row units. May marks the first month that single-detached starts have bucked their upward trend since September 2016. This coincides with a noticeable increase in new home listings in the resale market, providing added choice to homebuyers, causing less demand to spill over into the new home market.
The trend of housing starts in Kitchener-Cambridge-Waterloo (KCW) increased in May due to stronger starts for all types of housing. Single-detached and townhouse starts are higher this year. Demand for these housing types has been strong in the past few months due to the tight resale market and the influx of GTA households looking to purchase a more affordable home. New single-detached prices in KCW are approximately half of the cost of the same type of dwelling in Toronto.
Alberta & Saskatchewan
Housing starts are on the rise this year in most centres in Alberta and Saskatchewan – a good indication these oil and gas-dependent provinces are on the road to recovery. Strengthening labour market conditions in Calgary, Edmonton and Regina have generated more optimism among local homebuilders. In Saskatoon, year-to-date starts declined 25% as builders there remain cautious due to elevated multi-unit inventory.
Housing starts in BC trended higher in May with gains in Kelowna, Abbotsford-Mission and other urban areas off-setting a slower pace in Vancouver and Victoria. Low inventory in both the resale and new home market is fueling new construction with single-detached and multi-family starts leading the way.
Despite a slight downward move in May, overall housing starts for Vancouver are on track to exceed 25,000 new homes this year, nearing the record 27,914 starts set in 2016. The decline from April was almost evenly split between a slowdown in starts of ownership apartments (condos) and rental apartments.
CMHC uses the trend measure as a complement to the monthly SAAR of housing starts to account for considerable swings in monthly estimates and obtain a more complete picture of Canada’s housing market. In some situations analyzing only SAAR data can be misleading, as they are largely driven by the multi-unit segment of the market which can vary significantly from one month to the next.
The standalone monthly SAAR of housing starts for all areas in Canada was 194,663 units in May, down from 213,498 units in April. The SAAR of urban starts decreased by 10.2 per cent in May to 178,518 units. Multiple urban starts decreased by 10.8 per cent to 118,694 units in May and single-detached urban starts decreased by 8.9 per cent, to 59,824 units.
Rural starts were estimated at a seasonally adjusted annual rate of 16,145 units.