Housing starts trend up in March
OTTAWA – Housing starts continue to advance at an almost record pace in March, reaching levels that haven’t been seen since before the economy went sideways in 2007, according to the latest data from the Canada Mortgage & Housing Corporation (CMHC). The uptick was recorded on both a seasonally and actual basis.
According to the housing agency’s trend measure, starts touched 211,342 units in March – up from 205,521 for February. The trend measure is a six-month moving average of the monthly seasonally adjusted annual rates (SAAR) of housing starts.
CMHC uses the trend as a complement to the monthly SAAR of housing starts to account for the swings in the monthly estimates, which are largely driven by the market’s multi-unit segment that can vary significantly from month-to-month. The trend is believed to give a more complete picture of Canada’s housing market.
“March housing starts were at their highest level since September 2007, pushing the trend in housing starts upward for a third consecutive month,” CMHC chief economist Bob Dugan said in a statement. “Stronger residential construction at the national level is reflected by a rising trend in single-detached and multi-unit starts in Ontario and continued growth of new rental apartments in Québec.”
In its monthly digest of housing market activity, CMHC noted Vancouver housing starts trended lower for the fourth consecutive month but remained above the five-year average. Actual housing starts reached the highest level on record for March since 1972, driven by new apartment construction.
In Toronto, the total starts trend moved higher in March. While apartment starts registered the strongest increase in March, single-detached home construction has been trending higher since the end of last summer. Demand for new housing is growing as supply in the rental and resale markets is short, reflected by low rental apartment vacancy rates and declining active listings.
Meanwhile, multi-unit residential construction in the Montréal area remained significant in March. In addition to several seniors’ residences, many rental apartments were started in all parts of the city this past month and new rental units reached a 25-year high.
The standalone monthly SAAR of housing starts for all areas in Canada was 253,720 units in March, up from 214,253 units in February. The SAAR of urban starts increased by 20.2% in March to 235,674 units. Multiple urban starts increased by 30.2% to 160,989 units in March, while single-detached urban starts increased by 3.1% to 74,685 units.
Rural starts were estimated at a seasonally adjusted annual rate of 18,046 units.
Actual housing starts in Canada’s urban centres – which CMHC defines as towns with populations greater than 10,000 – for the month of March totalled 16,161 units national, a 25% leap from the 12,906 units recorded for March 2016. For the first three months of 2017, starts were 40,811 – a 14% advance from the 35,645 units recorded for the same period last year.
Meanwhile, single family home starts came in at 4,031 units for the month, 19% more than the 3,380 for March 2016. For the year-to-date, some 11,234 units were starts, an uptick of 14% over the 9,887 units for the same period a year ago.
In the multi-unit segment – including townhouses, apartments and similarly linked dwellings whether for the rental or condominium market – recorded preliminary starts of 12,130 units, 27% higher than the 9,526 units in March 2016. For the year-to-date, the total is 29,577 units, a 15% gain over the 25,758 units for the first quarter of last year.
In his note, Michael Dolega of TD Economics gave much of the credit for the building uptick to the weather, which has been unusually warm for the past two months in many parts of the country.
“The strength was particularly pronounced in Toronto and Vancouver, which have been the two hottest markets in recent quarters – despite some pullback in luxury segment sales in the latter market in recent months,” he pointed out. “The supply response in Toronto is particularly welcome, given the white hot pace of price growth and dearth of inventory on the market. The completion of these units should help take some steam out of Toronto's home price growth, although this won’t happen overnight and is likely a story for next year and beyond.”
However, he doesn’t expect the current pace to keep going as the year marches forward.
“All in all, this was a great report, but the lofty number is unlikely to last into the coming months as the effects of the warm winter likely manifest in a slower pace of homebuilding during spring and summer months,” Dolega said. “This is especially the case given the likely slowdown in the volatile multi-family segment, which should come back down to earth in the coming months. Ultimately, we expect starts will settle just below (200,000 units) during the remainder of the year.”