Monday, July 15, 2019

Canadian housing starts trended higher in June

OTTAWAJuly 9, 2019 /CNW/ – The trend in housing starts was 205,838 units in June 2019, compared to 200,530 units in May 2019, according to 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.

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“The national trend in housing starts increased in June, primarily due to higher trending row and apartment starts, in urban areas,” said Bob Dugan, CMHC’s chief economist. “The strong surge in the SAAR of apartment starts in April is also contributing to the high level of the trend measure of total housing starts in June”.

Monthly Highlights

Vancouver
Vancouver Census Metropolitan Area (CMA) housing starts trended higher in June, due to increased housing starts in the multi-unit sector. The majority of the multi-unit housing starts were concentrated in the City of Vancouver and the City of Richmond. Overall, the year-to-date starts increased by about 25%, supported by population growth and continuous strengthening of economic fundamentals.

Edmonton
Housing starts in Edmonton CMA trended higher in June, with single-detached starts declining slightly while multi-units starts doubled compared to the same month last year. With a high level of unsold inventory, the year-to-date starts saw a decline compared to the same period last year, as builders shift focus from starting new projects to completing existing ones while the economy continues to recover from the economic downturn.

Lethbridge
In the Lethbridge CMA, total starts trended higher in June 2019 compared to the previous month. The respective trend increased across all types of housing units in June. Construction activities picked up as the demand for new homes increased supported by growth in the millennial population.

Saskatoon 
The trend measure of total housing starts in Saskatoon rose further in June after homebuilders increased the pace of multi-unit construction. While the trend moved higher, actual starts of all housing types decreased by 16% during the first six months of 2019, compared to the same period in 2018. A number of factors, including higher construction costs and weaker new home demand, have contributed to builders scaling back production of new housing units so far this year.

Winnipeg 
In June 2019, the trend in total housing starts in the Winnipeg CMA trended higher compared to the previous month. For the first half of 2019, total starts trended 15% higher compared to same period the previous year, driven mainly by apartment starts. The 89% increase in apartment starts for the first half of 2019 supports the growing demand for rental accommodations in the CMA. Single-detached, semi-detached and row starts all trended lower in the first half of 2019 compared to the same period in 2018.

Greater Sudbury
The trend for overall housing starts in the Greater Sudbury CMA moved higher in June, owing to an increase in the trend for semi-detached starts. Semi-detached units are not readily available in the local resale market and tend to come at a more affordable price point for prospective first-time buyers looking for a new build.

Kingston
Following a strong performance in 2018, the actual total starts in Kingston CMA during the first half of 2019 were down 14% from a year earlier. The decline was most pronounced in the multi-unit segment due to substantially lower starts of semi-detached and rows, while the number of apartment starts was almost on par with the previous year. In response to the persistently low vacancy rates over the past ten years, all apartment starts through June 2019 were rental.

Toronto 
The total housing starts trend in the Toronto CMA remained virtually unchanged in June from the previous month with row and semi-detached home starts trending slightly lower, while apartment and single-detached homes trending slightly higher.  Overall, multi-unit home starts continue to dominate construction so far this year as more homebuyers choose lower priced condominium apartments and row houses over higher priced single-detached homes.

KitchenerCambridgeWaterloo
Total housing starts in KitchenerCambridgeWaterloo trended up in June. The increase came from higher starts of multi-unit homes (semi-detached, rows and apartments), as single-detached starts went in the opposite direction. Apartment starts continue to dominate, largely owing to the development occurring around the new light rail transit line. The moderation in single-detached starts can be linked back to low pre-construction sales in the second half of 2018.

Sherbrooke
Residential construction in the Sherbrooke CMA has been particularly strong since the beginning of the year. In fact, 984 housing units were started in the area during the first half of 2019—the highest level in over 30 years. The increase in activity was attributable mainly to the rental housing segment, as both purpose-built and seniors’ rental housing projects got under way. Overall, residential construction in the area has continued to be supported by the rise in full-time employment, migration and the aging of the population.

Québec 
From January to June 2019, foundations were laid for nearly 2,600 housing units in the greater Québec city area, a number similar to that recorded during the same period in 2018. Once again this year, activity was supported mainly by the construction of rental housing, which accounted for about two thirds of the dwellings started. This market segment has been stimulated by several factors, including greater demand for apartments due to the aging population.

Halifax
Total housing starts in Halifax continue to gain momentum in June, expanding by 45% year-over-year. The apartment segment remains the dominate driver of residential construction as strong population growth, especially apparent in the young adult population, and historically low vacancy rates support demand. The number of apartment units that broke ground this month reached the highest peak since 2015, as multi-unit starts year-to-date climbed by 62% compared to the same period last year.

CMHC uses the trend measure as a complement to the monthly SAAR of housing starts to account for considerable swings in monthly estimates and obtain a more complete picture of Canada’s housing market. In some situations, analyzing only SAAR data can be misleading, as they are largely driven by the multi-unit segment of the market which can vary significantly from one month to the next.

The standalone monthly SAAR of housing starts for all areas in Canada was 245,657 units in June, up 26% from 196,809 units in May. The SAAR of urban starts increased by 26% in June to 234,238 units. Multiple urban starts increased by 31% to 185,804 units in June while single-detached urban starts increased by 8% to 48,434 units.

Rural starts were estimated at a seasonally adjusted annual rate of 11,419 units.

Preliminary Housing Starts data are also available in English and French through our website and through CMHC’s Housing Market Information Portal. Our analysts are also available to provide further insight into their respective markets.

As Canada’s authority on housing, CMHC contributes to the stability of the housing market and financial system, provides support for Canadians in housing need, and offers objective housing research and information to Canadian governments, consumers and the housing industry.

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