Housing starts fall in February
OTTAWA – Housing starts fell in February by all three of the yardsticks used by the Canada Mortgage & Housing Corporation (CMHC). The trend measure was off 2%, on a seasonally adjusted annual rate (SAAR) they were down 16.3% while on an actual basis the decline was 29% for the month on a year-over-year basis.
The agency reported the trend in housing starts was 203,554 units in February 2019, compared to 207,742 units in January 2019 – a decline of about 2%. This trend measure is a six-month moving average of the monthly SAAR of housing starts. It’s used to account for the considerable swings in the monthly estimates, which are largely driven by the multi-unit segment of the market which can vary significantly from one month to the next.
“The national trend in housing starts resumed its downward trajectory in February while still remaining above historical average,” CMHC chief economist Bob Dugan said in a statement. “Both single-detached and multi-unit dwellings starts trended lower. Higher mortgage rates combined with still-favourable, but less stimulative economic conditions have contributed to softer demand on new home markets in urban centres.”
Starts fell in all regions of the country, led by a steep decline in Ontario’s multi-unit segment (where apartment starts fell substantially). Starts were also down in Quebec, across the Prairies as well as in British Columbia. In all three, apartment starts led the decline.
The standalone monthly SAAR of housing starts for all areas in Canada was 173,153 units in February, down 16.3% from 206,809 units in January. The SAAR of urban starts decreased by 18.0% in February to 155,663 units. Multiple urban starts decreased by 20.2% to 116,284 units in February while single-detached urban starts decreased by 10.6% to 39,379 units.
Rural starts were estimated at a seasonally adjusted annual rate of 17,490 units.
Actual starts of single-family homes in urban areas – defined as towns and cities with populations greater than 10,000 – fell 33% in February to a preliminary total of 2,135 units, from 3,164 units in February last year.
For the first two months of 2019, single-family starts totalled 4,605 units, a 31% plunge from the 6,698 units started during the comparable period last year. Declines were recorded in every region of the country, falling 16% Quebec, 26% across the Prairies, 27% in British Columbia, 35% in Atlantic Canada and 39% in Ontario.
Meanwhile, multi-unit segment starts – whether for the condominium or rental market – were pegged at a preliminary 8,249 units for the month, a drop of 28% from 11,533 units for February 2018. For the year-to-date, the drop moderated to 13% at 18,843 units.
The drop was felt in every region of the country except Atlantic Canada, where multi-unit starts were up 18% and B.C., where they gained by a margin of 16%.
Total housing starts for the month were preliminarily set at 10,884 units – a year-over-year decline of 29%. For the year-to-date, the decline was 18% at 22,948 units. They were down in every region, led by Ontario at 34% but up 6% in B.C.
“Housing starts plunged together with the average temperature across Canada in February, but the onset of cold, stormy weather does not appear to be the main driver for the pullback,” Fotios Raptis of TD Economics said in his research note.
The decline may instead be part of the wide spread weakness that appeared in the fourth quarter’s GDP (gross domestic product) data. Tougher mortgage rules and higher borrowing costs may be starting to impact new residential construction.