Actual housing starts up for October, but flat for the year

19 November 2022 HGO Staff

OTTAWA – Actual housing starts were up in October 2022 over the same month last year, according to the latest figures from the Canada Mortgage & Housing Corporation (CMHC), although they remain essentially flat for the year-to-date.

However, the federal housing agency noted the standalone monthly SAAR (seasonally adjusted annual rate) of total housing starts for all areas in Canada declined 11% in October (267,055 units) compared to September’s 2022 high (298,811 units). The SAAR of total urban starts also declined, down 11% to 245,234 units in October. Multi-unit urban starts decreased 13% to 188,189 units, while single-detached urban starts fell 4% to 57,045 units.

Rural starts were estimated at a seasonally adjusted annual rate of 21,821 units.

Chart courtesy of the Canada Mortgage & Housing Corporation. “Monthly SAAR declined in October, while the six-month trend in housing starts slightly increased. October’s decrease in monthly SAAR housing starts in Canada’s urban areas was driven by both lower multi-unit and single-detached starts. Among Montreal, Toronto and Vancouver, Montreal was the only market to post an increase in total SAAR housing starts, driven by a 19% increase in multi-unit activity,” CMHC chief economist Bob Dugan said in a statement, adding, “Toronto, down 47% and Vancouver, down 19%, contributed to the overall monthly decline in SAAR housing starts for Canada. Despite this, housing starts activity remains elevated in Canada in 2022.”

CMHC also reported the trend in housing starts was 277,667 units in October, up 0.5% from 276,374 units in September.

This trend measure is a six-month moving average of the monthly SAAR of housing starts and is used to account for considerable swings in monthly estimates – which are driven by the multi-unit segment of the market – and obtain a clearer picture of upcoming new housing supply.

However, actual starts of single-family homes in urban areas (defined as cities with populations of 10,000 or more) fell 7% in October to a preliminary 4,859 units compared to the same month in 2021. The decline was most keenly felt in Atlantic Canada and Quebec with only British Columbia reporting a slight increase in this category.

For the year-to-date, starts of single-family homes were also down 7% to 49,416 units from last year’s 53,585 units. The drops were steepest in Quebec and Ontario with the only gains being made in the Prairies.

Multi-unit segment starts for the month jumped 18% to 16,241 units, with upticks recorded in Ontario, the Prairies and B.C. Starts were essentially flat in Quebec but fell precipitously in Atlantic Canada.

For the period from January to October, multi-unit segment starts were tallied at 151,275 units – a year-over-year advance of 2%. The gains were highest in Atlantic Canada and the Prairies, modest in Ontario while declining in Quebec and B.C.

Thanks to the multi-unit segment, total housing starts for October were tallied at 21,100 units – up 11% over the 18,926 units recorded for the same month last year. Declines in Atlantic Canada and Quebec were more than offset by gains in Ontario, the Prairies and B.C.

However, for the year-to-date total housing starts were essentially flat on a year-over-year basis at 200,889 units. Regionally, declines in Quebec, Ontario and B.C. were offset by gains across the Prairies and in Atlantic Canada.

In her research note, Rishi Sondhi of TD Economics, said housing starts continued to be healthy, buoyed by elevated prices and low levels of unsold new home inventories and decline in the SAAR suggests a decline in fourth quarter residential investment, a trend that reinforced by downtrend in the issuing of building permits across the country.

“Such an outcome would be consistent with our forecast calling for a moderation in the pace of starts in 2023, as higher interest rates and past declines in demand weigh on homebuilding,” she opined.