Starts climb in October
OTTAWA – Housing starts made gains on all three measures employed by the Canada Mortgage & Housing Corporation (CMHC), according to figures released by the federal housing agency, which noted the construction of single-family homes was particularly strong last month.
The trend in housing starts was 222,734 units in October 2020, up 3.9% from 214,372 units in September. This measure is a six-month moving average of the monthly seasonally adjusted annual rates (SAAR) of housing starts and is used by CMHC to account for the considerable swings in the estimates they often cause. Those swings are usually caused by the multi-unit segment of the market, which includes apartments, townhouse and other linked housing built for both rental and condominium use.
“The national trend in housing starts increased in October following a pause in September,” CMHC chief economist Bob Dugan said in a statement. “Higher single-detached SAAR starts in October drove the overall trend higher, offsetting a second consecutive decline in monthly multi-family SAAR starts. Single-detached starts trended higher in several major centres, including Toronto and Montréal.”
The standalone monthly SAAR of housing starts for all areas in Canada was 214,875 units in October, an increase of 3.0% from 208,715 units in September. The SAAR of urban starts increased by 3.5% in October to 202,584 units. Multiple urban starts decreased by a slight 0.2% to 144,796 units in October while single-detached urban starts increased by 14.3% to 57,788 units.
Rural starts were estimated at a seasonally adjusted annual rate of 12,291 units.
Actual starts of single-family homes in urban area – which CMHC defines as cities with populations of 10,000 or more – were preliminarily estimated at 5,180 units in October. That’s a 19% leap from the 4,359 units recorded for October 2019. Huge gains in Quebec, Ontario and the Prairies were offset by declines in both Atlantic Canada and British Columbia.
For the year-to-date, single-family starts were totalled at 40,019 units – a 3% advance over the 38.433 units for the same period last year. Here, the regional picture shifted as declines were recorded across the Prairies and B.C. with the rest of the country posting gains.
Meanwhile, multi-unit segment starts were preliminarily tagged at 12,696 units in October, essentially unchanged from the same month last year. Only the Prairies and Ontario report upticks in this category.
However, for the year-to-date, multi-unit segment starts posted a 2% decline at 122,523 units with only Ontario and Atlantic Canada seeing gains.
Total housing starts for October were set at 17,876 units – a 5% improvement from the 17,060 units in October 2019. Only Ontario and the Prairies saw gains.
However, for the first ten months of 2020, total housing starts fell 1% to 162,542 units – compared to 163,829 units for the same period last year. Once again, Ontario posted the highest gains, complemented by slight upticks in Quebec and Atlantic Canada. B.C. and the Prairies saw declines.
In her research note, Rishi Sondhi of TD Economics pointed out homebuilding as “so far breezed through the pandemic” relative to other industries. “Notably, single-detached starts are beginning to pick up, which suggests that builders may be reacting to the outperformance in detached home sales observed during the pandemic,” she said.
Sondhi also remarked newly completed and unabsorbed units were lower than they have been over much of the past decade in most major markets, suggesting the market isn’t oversupplied and boding well for future gains in both construction and home prices.
“Moving forward, past pre-construction sales gains and low rates should ensure that starts remain elevated through next year,” she continued, adding, “Afterwards, some slowing may take place as softer population growth brought upon by the pandemic weighs on housing demand, and ultimately, homebuilding.”
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