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Starts stable in April

 22 May 2018     HGO Staff 

OTTAWA – According to the trend measure used by the Canada Mortgage & Housing Corporation, housing starts were stable at 225,696 units in April, down from 226,942 units in March. Thanks to an uptick in multi-unit starts, actual housing starts slipped 1% for the month.

The trend measure is a six-month moving average of the monthly seasonally adjusted annual rates (SAAR) of housing starts.

“In April, the national trend in housing starts remained stable at historically elevated levels, with lower starts of single-detached dwellings offsetting higher starts of multi-unit dwellings,” CMHC chief economist Bob Dugan said in a statement. “Notably, the national inventory of newly completed and unabsorbed multi-unit dwellings has been stable over the same period, indicating that demand for this type of unit has absorbed increased supply.”

CMHC uses the trend measure to complement the monthly SAAR of housing starts as a means to account for the considerable swings in monthly estimates, which are driven by the multi-unit segment of the market which can vary significantly from one month to the next.

Chart courtesy of the Canada Mortgage & Housing Corporation.The standalone monthly SAAR of housing starts for all areas in Canada was 214,379 units in April, down from 225,459 units in March. The SAAR of urban starts decreased by 4.7% in April to 198,090 units. Multiple urban starts decreased by 2.7% to 141,032 units in April while single-detached urban starts decreased by 9.3% to 57,058 units.

Start of single family homes fell 17% in April to a preliminary 4,455 units – compared to 5,339 units started in April 2017. Starts fell 21% in Ontario; 5% in Quebec; 11% in British Columbia and by 21% across the Prairies. They gained 8% in Atlantic Canada.

For the first four months of the year, single starts in urban areas – which CMHC defines as population centres with 10,000 or more residents – were off 10% to 14,862 units, from 16,573 units for the comparable period last year. They were down in all regions of the country except Atlantic Canada, which is the smallest in terms of population.

Meanwhile, multi-unit starts – whether apartments, townhouses or other linked dwellings for either the rental or condominium market – were up 6% to a preliminary 11,513 units, compared to 10,858 units in April 2017. Perhaps as a response to affordability questions, multi-unit starts were up 15% in B.C., 13% in Quebec and 10% in Ontario but down by double-digits in both the Prairies and Atlantic Canada.

For the year-to-date, multi-unit starts were up 7% to 43,211 units – from 40,401 units the year prior.

For the month of April, total housing starts were down 1% to a preliminary 15,968 units but for the year-to-date were up 2% to 58,073 units, according to the federal housing agency.

In his research note, Rishi Sondhi of TD Economics pointed out that despite the dip in actual starts and the easing in the seasonally adjusted rate, “the rate of homebuilding in Canada remains strong…supported by continued population and income growth.

“Homebuilding is proceeding at firm pace across most of the country, and is particularly strong in B.C. and Quebec,” he continued. “The Prairie provinces remain as the key exception, with homebuilding under pressure from oversupplied markets in Alberta and Saskatchewan, with a decline anticipated in Manitoba after an outsized gain last year.”

Sondi said the bank expects the pace of starts to pull-back closer to the 200,000-unit mark in the second half of 2018 and “dip below that level towards the fundamentally-supported pace next year as higher interest rates and regulatory changes weigh on demand.”

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