CMHC reports annual pace of housing starts in Canada increased in April
The trend in housing starts was 206,103 units in April 2019, compared to 202,420 units in March 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.
“The national trend in housing starts increased in April, as higher-trending multi-unit starts offset a continued decline in the trend for single starts, in urban areas,” said Bob Dugan, CMHC’s chief economist. “The increase in the trend of multi-unit starts reflects a strong recovery in multi-unit SAAR activity in March and April from consecutive declines at the end of 2018 and the first months of 2019.”
Vancouver Census Metropolitan Area (CMA) housing starts continued to trend higher in April 2019, despite a year-to-date 2% decline compared to last year, partly due to the slowdown in the single-detached sector. The year-to-date multi-family starts increased by 3% compared to the same period last year. Fifty-three per cent of these projects are located in the cities of Vancouver and Burnaby. As the reduced sales activities continued to allow listings to accumulate, developers have started to focus more on existing projects rather than new construction.
Housing starts in the Kelowna CMA declined in April, relative to the same month last year, in both the single-detached and multi-unit segments of the market. Additionally, in the first 4 months of 2019, housing starts came in 32% lower relative to the same period in 2018. This was largely due to the persistence of large multi-unit projects getting underway early in 2018 relative to what has been seen so far in 2019. Overall, this moderation in new construction activity is in line with population growth patterns and a growing inventory of unsold units in the existing and new home markets.
Calgary CMA housing starts trended slightly higher in April, as row-home starts saw a year-over-year increase of 42% in the first four months in 2019. Although construction activity in the freehold multi and single home sectors continued to slow down as the economy recovers, the year-to-date housing starts in the condo sector has increased by 19% compared to the same period last year, indicating a relatively positive outlook from both buyers and developers in the more affordable housing sector.
The trend in total housing starts declined for a sixth straight month after local homebuilders significantly scaled back production of single-detached and multi-family units. Homebuilding activity in Regina has continued to slow in 2019 due to higher construction costs and weaker economic conditions. As a result, year-to-date housing starts in the Regina CMA numbered 172 units in April, compared to 546 in the same period of 2018.
In the Winnipeg CMA, total starts trended higher in April 2019 compared to the previous month, driven by apartment starts which increased by 12%. There were increases across all types of housing units, except row which decreased by 27%. The increase in the demand for housing units resulted in a decrease in the inventory of completed and unsold units.
Total housing starts trended slightly lower during April in the Toronto CMA owing mainly to lower trending condominium apartment and single-detached home starts. Strong pre-construction condominium apartment sales over the past two years are likely to be reflected in future housing starts. Declining sales of pre-construction units of single-detached homes during the past year will likely mean fewer starts over the coming months.
Total housing starts trended lower as the Oshawa CMA saw the least starts for the month of April in almost four decades. Strong demand for relatively affordable multi-unit housing led to record high apartment starts in 2018. In turn, this resulted in a record-high level of under construction inventory, which has preoccupied builders.
Overall housing starts in Hamilton reversed course and trended up, due to the highest townhome starts since May 2014. The strong demand for new townhomes was fueled by its price point, which fell within the price range that attracted the most buyers in the resale market over the past 12 months. The high level of competition for those resale homes caused a number of buyers to purchase a new townhome instead.
Housing starts in the Québec CMA have been trending lower since the beginning of the year. From January to April 2019, starts were down by more than 30% from the same period last year. This was due mainly to fewer rental housing units started in the first four months of this year. Still, the number of rental housing units now under construction in the area remains at a record level.
The downward trend in housing starts in the Saguenay CMA that began several months ago continued in April 2019. The decrease in activity was attributable to fewer homeowner (freehold and condominium) housing starts. Overall, residential construction in the area has been limited by the slowdown in employment and low population growth.
New Brunswick’s total housing starts increased in April compared to the same month last year, mainly due to an increase in multi-unit construction. In the first four months of 2019, multi-unit construction increased 158% compared to 2018. Increased apartment construction activity is supported by historic low vacancy rates and strong population growth in urban centers. On the other hand, single-detached construction continues to trend down. In fact, the number of single-detached starts in the first four months of the year were the lowest on record.
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 235,460 units in April, up 22.6% from 191,981 units in March. The SAAR of urban starts increased by 24.0% in April to 220,387 units. Multiple urban starts increased by 29.6% to 175,732 units in April while single-detached urban starts increased by 6.0% to 44,655 units.
Rural starts were estimated at a seasonally adjusted annual rate of 15,073 units.
Preliminary Housing Starts data are also available in English and French through the CMHC website and through CMHC’s Housing Market Information Portal.