Housing starts fall 2% in April
OTTAWA – Actual housing starts fell across the country in April 2023, according to the latest data released by Canada Mortgage & Housing Corporation (CMHC), although it jumped 22% on a seasonally adjusted basis when compared to the previous month.
The federal housing agency reported the standalone monthly seasonally adjusted annual rate (SAAR) of total housing starts for all areas in Canada increased 22% in April (261,559 units) compared to March (213,780 units).
The monthly SAAR of total urban starts (in towns and cities with 10,000 population and over) increased 26%, with 241,585 units recorded in April. Multi-unit urban starts increased 33% to 201,621 units, while single-detached urban starts decreased 2% to 39,964 units.
CMHC noted the Vancouver, Toronto, and Montreal regions all recorded an increase in total SAAR housing starts in April, with Vancouver up 36%, Toronto up 54%, and Montreal up 43%. Both Toronto and Montreal recorded declines in starts of single-family homes that were offset by large increases in multi-unit starts, while Vancouver posted increases in both segments.
The rural starts monthly SAAR estimate was 19,974 units.
CMHC’s trend in housing starts was 240,403 units in April, down 0.2% from 240,876 units in March. The trend measure is a six-month moving average of the monthly SAAR of total housing starts for all areas in Canada.
“While both the SAAR of housing starts and the trend have returned to levels observed before the pandemic, housing starts are expected to drop significantly in 2023, before seeing some recovery in 2024 and 2025, according to our latest forecast,” CMHC deputy chief economist Aled ab Iorwerth said in a statement. “The expected decline is due to constraints in new construction, including labour shortages, as well as higher construction and borrowing costs for housing developers.”
Actual starts of single-family homes in the month of April 2023 were pegged at 3,517 units, down 36% from the 5,529 units started in April 2022. The decline was felt in every region across the country.
For the first four months of the year, single-family starts tallied at 11,436 units, a 29% drop from the comparable period’s 16,118 units. Once again, the decline struck every region from coast-to-coast.
Meanwhile, actual starts of multi-unit segment – which covers apartments, townhouses and other linked housing – climbed 11% to 16,993 units, up from the 15,312 units started in April 2022. The uptick was felt in Atlantic Canada, Ontario and British Columbia offset by declines in Quebec and across the Prairies.
For the year-to-date, multi-unit segment starts tallied 52,887 units, a 6% advance over the comparable period’s 49,706 units. Huge gains in Ontario and B.C. were offset by declines in Atlantic Canada, Quebec and the Prairies.
Total housing starts for April 2023 were pegged at a preliminary 20,510 units, a 2% slip from the 20,841 units for same month last year. Declines in Quebec and the Prairies were offset by gains in the rest of the country.
For the first four months of 2023, total housing starts fell 2% to 64,323 units.
CMHC is also forecasting housing starts will continue to decline over the rest of the year, driven by several factors including labour shortages, lower immigration levels and climbing mortgage interest rates as well as slower income and employment growth.
In its recent Housing Market Outlook, the agency forecast total housing starts of 211,917 units, down 19% from the 261,849 units started in 2022 and way off the record 271,198 units started in 2021.
In 2024, total starts are expected to climb 5.6% to 223,783 units and then by another 5% to 235,547 units the following year.
What’s more, CMHC notes the Canadian Real Estate Association (CREA) is forecasting similar declines in housing resale market, meaning one of the primary drivers of furniture, mattress and appliance sales – the housing market – will slow significantly from the highs seen during the COVID-19 pandemic.
Related Story: CREA revises 2023 sales forecast