In June 2023, Canada experienced a notable upswing in housing starts, marking the largest monthly increase in a decade. The Canada Mortgage and Housing Corporation (CMHC) reported that the seasonally adjusted annual rate (SAAR) of housing starts reached 281,373 units, a 41% surge from the previous month of May, which had only recorded 200,018 units.

The growth in housing starts was primarily driven by multi-unit projects, accounting for 82% of total starts in June. The urban areas saw a substantial rise in housing starts as well, with total urban starts increasing by 46% to 262,815 units. Within the urban areas, multi-unit starts surged by 59% to 219,914 units, while single-detached urban starts showed a modest increase of 3%, reaching 42,901 units.

Notably, the cities of Vancouver and Toronto led the construction activity, contributing significantly to the housing starts in the urban centers. Together, they accounted for 47% of the total housing starts in Canada’s urban areas for June. Vancouver experienced a remarkable monthly increase of 71%, while Toronto’s housing starts doubled compared to May. Both cities saw growth in both single-detached and multi-unit starts.

The CMHC also observed significant monthly increases in Halifax (447%), Gatineau (342%), and Trois-Rivières (330%), whereas some cities experienced declines in housing starts, such as Peterborough (81%), Greater Sudbury (79%), and Saint John (78%). Although Ontario cities represented half of the cities that posted monthly declines, the province as a whole still saw a 75% increase in total housing starts in June.

The housing starts’ longer-term trend, represented by the six-month moving average of the SAAR, stood at 234,974 units in June, marking a 2.4% rise from May. This uptick slightly reversed a declining trend that had been observed since the previous November. However, economists warn that the jump in housing starts might be short-lived due to the ongoing challenge of high interest rates, which continue to impact the economy and construction activity. Despite the impressive monthly increase, the six-month moving average continued to show a slight decline. Slowing home sales are expected to contribute to a decrease in construction activity going forward, making homebuilding a drag on residential investment in the coming quarters.

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