construction housing starts trend

National housing starts trend declines in September

Thursday, October 11, 2018

In September 2018, the trend in national housing starts was 207,768 units, down from 213, 966 units in August 2018, reports 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.

“The national trend in housing starts stood at a 19-month low in September, following declines in four of the last five months,” said Bob Dugan, CMHC’s chief economist, in a press release. “The slowdown in the pace of new residential construction activity in recent months is a result of both lower single-detached and multi-starts activity and brings new residential construction closer to its long run average from the elevated levels registered in 2017.”

Housing starts in the Vancouver Census Metropolitan Area (CMA) trended down in September 2018 as fewer single-detached and multi-family projects were launched. Surrey saw the most construction activity last month, accounting for one quarter of all housing starts. Housing demand remains strong and has resulted in the pace of new home construction in the Vancouver CMA to date equaling the pace from the same period in 2017.

In the Kelowna CMA, the trend measure moderated in September 2018 as a result of pullback in new construction activity in both single-detached and multi-unit dwellings. In the first nine months of the year, while new construction activity has declined relative to the record pace of housing starts seen over the same period in 2017, it remains significantly above the 10-year average.

In Saskatoon, the trend measure of total housing starts increased last month after both single-detached and multi-family starts trended higher. However, overall new home construction in the Saskatoon CMA fell by 17 per cent through September compared to one year ago, reflecting fewer single-detached housing starts.

Winnipeg’s total housing starts continued to trend higher in September 2018. Several new condominium projects were started last month. To date this year, multi-family starts are three per cent above year-ago levels. However, total housing starts remain five per cent below last year’s levels as climbing inventories of single-detached units have slowed activity in this segment of the market.

Total housing starts trended up in September 2018 in Toronto, as the decline in the trend in single-detached starts was more than offset by climbing multi-unit starts. Multi-unit starts were strong across unit types, led by semi-detached units, which had the most starts for the month of September since 2004. The relative affordability of these higher-density units continues to drive their demand.

For the first time in four months, housing starts in the St. Catharines-Niagara CMA trended higher, mainly due to the multi-unit sector. New single-detached construction continued to decline, reaching the lowest monthly level in seven years. A more balanced resale market and higher mortgage borrowing costs have dampened housing demand, especially for single-detached homes.

The Brantford CMA saw single-detached starts slow for the first time since January 2018. As a result, the pace of overall housing starts in September 2018 also slowed significantly, since most new homes in Brantford are single-detached. Single-detached starts have already far surpassed their annual totals from each of the previous 10 years.

In Quebec, housing starts trended down in the third quarter of 2018. However, the year-to-date total is slightly higher than that of the first nine months of 2017, due to the strength of the Montreal CMA’s rental apartment starts.

Total housing starts trended higher in Halifax last month, impacted by continued strength in multi-unit construction. Improving employment levels and strong population gains are supporting a growing rental market demand with multiples starts climbing 21 per cent year-over-year in September 2018. After remaining flat for the past two months, single-detached starts also saw gains last month, rising 11 per cent compared to last year.

The standalone monthly SAAR of housing starts for all regions of Canada was 188,683 units in September, a decrease compared to August’s 198,843 units. The SAAR of urban starts fell by 5.9 per cent in September to 175,653 units. Multi-unit urban starts declined by 8.9 per cent to 122,656 units last month, while single-detached urban starts climbed two per cent to 52,997 units. Meanwhile, rural starts were estimated at a SAAR of 13,030 units.

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