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Housing starts make big gains in November, CMHC reports

 14 December 2017     HGO Staff 

OTTAWA – Housing starts reached a 10-year high in November, according to Canada Mortgage & Housing Corporation (CMHC), which reported its trend measure hit 226,270 units for the month, compared to 216,642 units in October.

The trend measure is the six-month moving average of the monthly seasonally adjusted annual rates (SAAR) of housing starts. CMHC uses it to complement the monthly SAAR to account for the swings in the monthly estimates, which are largely driven by the market’s multi-unit segment which can vary significantly from one month to the next.

Chart courtesy of the Canada Mortgage & Housing Corporation.“The trend in housing starts reached its highest level in almost 10 years this November, reflecting a second consecutive increase in multiple starts,” CMHC chief economist Bob Dugan said in a statement. “This largely reflects construction of multiple units in Toronto, where evidence of overbuilding is low due to the decreasing inventory of completed and unabsorbed multiple units and strong demand.”

The standalone monthly SAAR of housing starts for all areas in Canada was 252,184 units in November, up from 222,695 units in October. The SAAR of urban starts increased by 14.4% in November to 235,412 units. Multiple urban starts increased by 16.9% to 175,016 units in November. Single-detached urban starts increased by 7.5% to 60,396 units.

Actual starts also jumped dramatically in November.

CMHC reported starts of single family homes in urban areas – which it defines as towns or cities with populations greater than 10,000 – were set at a preliminary 5,477 units in November, down 4% from the 5,689 units recorded for November 2016.

For the year-to-date, single starts totalled 58,547 units for an uptick of 6% over the 55,234 units for the first 11 months of 2016.

Meanwhile, actual multi-unit starts – including apartments, townhouses and other linked housing for both the condominium and rental markets – were set at 15,249 units for November, leaping 63% from the 9,367 units for the same month last year.

Segment starts for the year-to-date totalled 127,269 units, up 16% from the 109,660 units for the comparable period last year.

Total starts for the month of November were pegged at a preliminary 20,726 units, a 38% gain over the 15,056 units for November 2016. For the year-to-date, total starts were 185,814 units – a 13% jump over the 164,894 units for the same period 2016.

CMHC’s data showed the biggest gains were in Ontario, where total starts climbed some 66% on a year-over-year basis for the month of November.  Every other province posted upticks except for Nova Scotia where total starts fell 8%.

For the year-to-date the only province to record a drop in total starts was Newfoundland & Labrador. All others recorded double digit gains, except Ontario which was up 9% and British Columbia where starts climbed 2%.

“Homebuilding activity was extremely solid in November, rising to its highest level since April 2012,” Rishi Sondhi of TD Economics said in his research note. “Housing construction has remained resilient this year despite the ‘one-two punch’ of regulatory measures aimed at cooling housing demand and rising mortgage rates. Ultimately, a healthy economic backdrop and firm population growth have provided support to homebuilding activity nationally.”

Despite November’s glowing report, Sondhi said TD still expects homebuilding to ease to under 200,000 units in 2018 – thanks mainly to high mortgage rates and updated eligibility requirements, which will have a disproportional impact on the Toronto and Vancouver markets where affordability is becoming a critical issue.

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