construction housing starts trend

National housing starts trend decreases in October

Thursday, November 8, 2018

The trend in housing starts was 206,171 units in October 2018, down from 207,809 units in September 2018, according to Canada Mortgage and Housing Corporation (CMHC). This trend measure is a six-month moving average of monthly seasonally adjusted annual rates (SAAR) of housing starts.

“The national trend in housing starts declined for a fourth consecutive month in October, which leaves the trend at its lowest level since February 2017,” said Bob Dugan, CMHC’s chief economist, in a press release. “However, despite declining for several months, the trend remains slightly above its long-run average because it follows historically elevated levels of activity in 2017.”

In the Vancouver Census Metropolitan Area (CMA), housing starts trended lower in October 2018 as the number of single-detached and multi-family projects declined. The City of Vancouver accounted for over half of all housing starts in the CMA, with several major projects underway. As the region’s resale home market has softened over the course of the year so far, new home construction for the year is expected to be slightly below the total for 2017.

Housing starts in the Victoria CMA trended down in October 2018, drawing year-to-date totals down by six per cent year-over-year. The annual changes in October housing starts are large, due to the timing of major multi-family projects. The trend in housing starts remains elevated overall.

In Calgary, the trend in housing starts decreased in October, compared to one month before. Declining new construction was largely driven by lower apartment stars, as inventory levels for apartment units remain high. However, so far this year, total housing starts last month were three per cent up compared to year-ago levels.

The trend measure of housing starts climbed last month in Regina after local homebuilders increased production of apartment units. However, the overall pace of new home construction is well below October 2017, especially in single-detached starts, where high levels of inventory has resulted in slowing production. Multi-family construction through October fell 34 per cent compared to the same period last year.

Toronto’s CMA saw total housing starts trend higher in October following strong starts in the multi-family sector. Booming pre-construction sales of more affordable townhomes and condominium apartments over the past two years contributes to housing starts in 2018. Meanwhile, the downward trend in single-detached starts remained into October, leading to its lowest level this year, reflecting the slowdown in their pre-construction sales over the past year. The rising cost of land and lack of serviceable land have hindered new sales centre openings recently, resulting in fewer starts.

In London, the trend measure of housing starts declined by nearly 10 per cent in October 2018. Last month’s drop was a result of fewer apartment projects starting and the continued slowdown in single-detached starts. The number of single-detached homes finished but unsold has trended higher in 2018, which is likely causing fewer starts as builders can satisfy some of the demand using existing inventory.

The trend in total housing starts reached a five-month high in October in the Belleville CMA. The pace of new home construction climbed for both single-detached and multi-unit homes. One third of the total starts were rental apartments. All apartments that are currently under construction are purpose-built rentals, representing 35 per cent of total units under construction. Falling vacancy rates encouraged builders to build more rental units.

Total housing starts since the start of 2018 are showing a slight increase in Montreal. An aging population in this CMA continues to fuel seniors’ housing construction. Meanwhile, relatively low vacancy rates on the rental market also stimulated the construction of rental units in the metropolitan area.

The Trois-Rivières region saw housing starts trend higher in October 2018. Condominium and rental housing construction accounted for this increase, including the start of construction on a 118-unit seniors’ housing development. The declining inventory of unabsorbed new condominiums along with employment growth helped in supporting the need for new units in this market segment, while the aging population continued to cause demand for seniors’ housing in the region.

The standalone monthly SAAR of housing starts for all areas of the country was 205,925 units in October 2018, up from 189,730 units compared to September 2018. The SAAR of urban starts climbed 806 per cent in October to 191,964 units. Multiple urban starts jumped 16.8 per cent to 145,442 units last month, while single-detached urban starts fell by 10.7 per cent to 46,522 units. Meanwhile, rural starts were estimated at a SAAR of 13,961 units.

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