construction housing starts trend

National housing starts trend held steady in January

Wednesday, February 13, 2019

In January 2019, the trend in housing starts was 208,131 units, compared to December 2018’s 207,171 units, according to Canada Mortgage and Housing Corporation (CMHC). The trend measure is a six-month moving average of the monthly seasonally adjusted annual rates (SAAR) of housing starts.

“After recent declines, the national trend in housing starts held steady in January and remained above [the] historical average,” said Bob Dugan, CMHC’s chief economist, in a news release. “While single-detached starts continued to trend lower in January, this was offset by an uptick in the trend for multi-unit dwellings in urban centres.”

In the Vancouver Census Metropolitan Area (CMA), the trend measure for housing starts held steady in January after trending lower during the second half of 2018. Most housing starts in the region were in the condominium segment in Vancouver and Burnaby, which accounted for over half of new construction activity for the month, when combined.

In Kelowna, total starts saw a sharp uptick in January. Condominium units in the region accounted for the largest share of the increase with larger projects breaking ground in January. This continued a trend of increased multi-family construction in the region, however single detached starts also saw a slight increase.

The Lethbridge region saw total housing starts trend higher in January 2019 on a monthly basis, mainly due to the increase in single-detached housing starts. Multi-family starts saw an insignificant decline as the decrease in both row and apartment starts was partially offset by the increase in semi-detached starts.

Saskatoon’s trend measure of housing starts rose slightly in January 2019, but actual total housing starts for the month of January fell 15 per cent year-over-year. According to CMHC, slowing building activity is due to a steep decline in multi-family construction in the region, while the number of single-detached starts increased on an annual basis.

In the Toronto CMA, the total housing starts trend remained unchanged between December 2018 and January 2019. Starts for single and semi-detached homes and condominium units trended lower. For row homes, starts trended significantly higher as strong pre-construction sales in late 2018 transitioned into housing starts. Increased borrowing costs kept pre-construction sales of new homes, especially low-rise, low in 2018. CMHC believes that in 2019, even fewer units will break ground in Toronto.

Total housing starts in London trended higher due to apartment construction ramping up as single detached and row home starts continued to trend lower. A rising number of completed, yet unsold, new single-detached homes led to fewer single-detached starts, since any demand was satisfied with existing stock.

The Ottawa region saw housing starts trend lower across all home types in January 2019, with starts reaching their lowest level for the month in over two decades. The number of units under construction in January was historically high, resulting in homebuilders having fewer resources to commit to new construction.

January 2019 saw Gatineau starts trend lower for the second month in a row. However, the number of new rental units remains elevated, as the aging population and low vacancy rates continue to lead to starts for this home type.

In Quebec, housing starts activity started off slowly in January 2019, due to a decrease in the multi-unit segment. Despite this, multi-unit starts, especially rentals, are expected to remain relatively strong this year. Activity in this market segment is largely due to migration and an aging population.

The New Brunswick CMA saw total housing starts climb 33 per cent year-over-year in January 2019. This increase was due to the number of multi-unit housing starts in 2019 doubling January 2018 levels. For single-detached homes, construction has been trending down, and the number of starts in January 2019 was the lowest for the month in 20 years.

CMHC uses the trend measure to complement the monthly SAAR of housing starts to account for considerable swings in monthly estimates and form a more complete picture of the national housing market.

The standalone monthly SAAR of starts for all regions of Canada was 207,968 units in January, a decline from 213,630 units in December 2018. The SAAR of urban starts fell by 2.1 per cent in January to 190,912 units. Multiple starts in urban regions rose 0.7 per cent to 146,353 units in January, while single-detached urban starts dropped 10.4 per cent to 44,559 units. Meanwhile, rural starts were estimated at a SAAR of 17,056 units.

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