The trend in housing starts was 216,362 units in May 2018, down from 225,481 units in April 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.
“In May, the national trends in housing starts declined following several months of stability,” said Bob Dugan, chief economist at CMHC, in a press release. “This reflects a decline in multi-unit urban starts in May that leaves them close to their 10-year average following several months of historically elevated levels.”
In Vancouver, the trend measure for housing starts remained steady in May 2018, as the increased pace of new home construction continued in the Vancouver Census Metropolitan Area (CMA). Increased activity is particularly evident in the multi-family segment, where housing starts have increased by nine per cent so far this year.
The city of Langford led Metro Victoria’s housing starts in May with an increase in condo construction. Overall, the trend in total housing starts increased six per cent compared to the previous month and year-to-date total starts were up 34 per cent. Rental construction remains the largest driver of housing starts in Metro Victoria, while single-detached units are down 15 per cent this year.
In Saskatoon, the trend measure of total housing starts climbed in May as slowing single-detached starts was countered by a much faster pace of multi-family construction. The strong gains in multi-family starts can largely be attributed to a purpose-built rental apartment project that began construction in May. In 2018, multi-family starts in Saskatoon were up by 63 per cent, compared to the same period last year.
Total housing starts in the Toronto CMA trended down in May, primarily driven by lower trending apartment and townhome starts. More supply in the city’s resale market and higher borrowing costs contributed to lower demand for new homes, particularly single-detached units. Fewer new home sales have been conducted since 2017, leading to fewer housing starts.
Brantford’s housing starts trended higher in May, as overall starts continued to be driven by single-detached starts. Despite moderating prices in Hamilton, some Hamilton buyers continue to purchase homes in Brantford’s more affordable new single-detached housing market.
In Windsor, the housing starts trend declined by 14 per cent in May, which was the sixth consecutive month of decline in this CMA. May’s decline reflected a lower number of multi-unit starts, with apartment starts contributing the most. The recent slowdown in housing starts coincided with a moderation in existing housing market activity, which follows record highs as the effect of GTA buyers has declined.
Housing starts in Kingston trended higher for the third consecutive month, due to an increase in the trend for both single-detached and multi-unit housing starts. These projects are helping to address a shortage of homes for resale, as the number of new listings has dropped to its lowest level since March 2005.
In May 2018, the housing starts trend in Sherbrooke was relatively stable. In the first five months of 2018, conventional rental housing starts increased year-over-year, due to the decrease in the vacancy rate in 2017.
In New Brunswick, housing starts fell 10 per cent in May 2018, compared to the same period one year before, continuing a trend of lower housing starts to date this year. A significant decline in multiple starts has resulted in a 26 per cent decline in New Brunswick’s total housing starts to date.
CMHC uses the trend measure in conjunction with the monthly SAAR of housing starts to account for swings in monthly estimates and obtain a better picture of Canada’s housing market. This is because analyzing only SAAR data can be misleading, as this data is largely driven by the multi-unit segment of the market, which can vary significantly month-to-month.
The standalone monthly SAAR of housing starts for the entire country was 195,613 units in May, down from 216,775 units in April. The SAAR of urban starts fell by 11.1 per cent in May to 178,201 units. Multiple urban starts dropped 16.4 per cent to 119,811 units in May, while single-detached urban starts climbed two per cent to 58,390 units.
Rural starts were estimated at a SAAR of 17,412 units.