Starts fall in May
OTTAWA – Although actual construction in the multi-unit made gains in last month, overall housing starts for the month of May 2019 continued to fall by all three measures used by the Canadian Mortgage & Housing Corporation (CMHC). With some exceptions, the decline was felt across the country.
For example, the trend measure in housing starts was 201,983 units (on an annualised basis) last month, down from 205,717 units in April 2019. The trend measure is a six-month moving average of the monthly seasonally adjusted annual rates (SAAR) of housing starts.
“The national trend in housing starts decreased in May as a result of continuing decline in the trend for single starts as well as a decline in the trend of multi-unit starts that follows gains in this segment in recent months, in urban areas,” CMHC chief economist Bob Dugan said in a statement. “The decrease in the trend of multi-unit starts reflects a decline in the SAAR level of multi-unit activity in May from the unusually elevated level registered in April, which leaves multi-unit SAAR starts closer to its 10-year average.”
CMHC uses the trend measure to complement the monthly SAAR of housing starts to account for the swings often found in the monthly estimates, which are largely driven by the multi-unit segment of the market that can vary from month to month.
The standalone monthly SAAR of housing starts for all areas in Canada was 202,337 units in May, down 13.3% from 233,410 units in April. The SAAR of urban starts – defined as population centres of 10,000 or more – decreased by 14.4% to 186,946 units. Multiple urban starts decreased by 18.5% to 141,851 units while single-detached urban starts increased by 1.8% to 45,095 units.
Rural starts were estimated at a seasonally adjusted annual rate of 15,391 units.
Actual starts of single-family homes was set at a preliminary 4,448 units in May, down 19% from 5,325 units in May 2018. For the year-to-date, starts in this category were 14,968 units – falling 26% from the same period last year.
The decline was felt in every region the country, led by Ontario where they fell 34%. They were down 28% in Atlantic Canada; 26% in the Prairies; and, 23% in British Columbia. Quebec’s decline was only 6%.
Starts in the multi-unit segment – which includes apartments, townhouses and other linked dwellings for both the condominium and rental markets – were set at a preliminary 12,068 units for May, an uptick of 15% over the 10,460 units started in May 2018. For the first five months of the year, starts in this segment totalled 55,174 units – up 3% from the 53,699 units for the comparable period last year.
Starts were up in Atlantic Canada, Quebec and B.C. but fell across the Prairies and in Ontario.
Total housing starts were up 3% for the month of May at a preliminary 16,476 units but down 5% for the year-to-date at 70,142 units.
Starts were down in Ontario and across the Prairies but up in B.C., Quebec and Atlantic Canada.
In his research note, Rishi Somdhi of TD Economics, pointed out housing starts have been firm so far in the second quarter of the year, averaging about 217,900 units on an annualised basis.
“Alongside indications of a healthy rise in home sales, this strength sets us up for positive growth in second quarter residential investment – its first in over a year,” he said.
“Moving forward, we anticipate some slowing in the pace of homebuilding, as past declines in housing demand feed into construction,” he continued, adding there are warning signs out there for B.C.’s housing market. “All told, homebuilding should remain relatively healthy at around 200,000 units (annualised) going forward, lifted by robust population growth, solid labour markets, and the recent slide in borrowing costs.”