Canada: Housing Starts Trend Upwards in March

Housing starts are trending higher at 211,342 units in March 2017, compared to 205,521 units in February 2017, according to Canada Mortgage and Housing Corporation (CMHC). This trend measure is a six-month moving average of the monthly seasonally adjusted annual rates (SAAR) of housing starts.

“March housing starts were at their highest level since September 2007, pushing the trend in housing starts upward for a third consecutive month,” said Bob Dugan, CMHC’s Chief Economist. “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.”

Monthly highlights

1. 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. Starts activity in the Vancouver CMA is also picking up again after an unusually cold winter.

2. In Toronto, the total starts trend moved higher in March, supported by all housing types. While apartment starts registered the strongest trend 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.

3. The decline in townhouse starts contributed to a downward trend in Hamilton CMA total housing starts, despite the strength in single-detached and semi-detached housing starts. Notwithstanding this month’s decline, strong demand from local residents and out-of-town buyers continued to support townhouse construction as this type of dwelling remains the most viable option for many first time homebuyers.

4. ‘Demand’ is the story in St. Catharines-Niagara. As buyers from Toronto and Hamilton seek the relatively affordable options, resale inventory is being squeezed and prices are soaring. This is prompting buyers to turn to the new housing market, where singles in land-abundant Niagara Falls remain a sought-after commodity.

5. 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 metropolitan area this past month, and new rental units reached a 25-year high. With the decrease in inventories of unsold condominium units, renewed growth was also noted in this segment, as many new projects got under way.

6. The pace of residential construction in the Québec area has slowed down since the beginning of the year. This decline has been mainly due to a decrease in activity in the purpose-built rental housing segment. It should be mentioned that starts of this type reached historically high levels in 2015 and 2016. Consequently, given the significant number of rental apartments currently under construction and the recent increase in the vacancy rate in the area, a downward adjustment was expected.

7. There is an upward momentum to residential construction in Charlottetown. Strong population growth coupled with a tight supply of both resale homes and rental units has led more homebuyers to look to the new home market. Singles starts over the first quarter of 2017 reached levels not recorded since 1987.

CMHC uses the trend measure as a complement to the monthly SAAR of housing starts to account for considerable swings in monthly estimates and obtain a more complete picture of Canada’s housing market. In some situations analyzing only SAAR data can be misleading, as they are largely driven by the multi-unit segment of the market which can vary significantly from one month to the next.
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 per cent in March to 235,674 units. Multiple urban starts increased by 30.2 per cent to 160,989 units in March, while single-detached urban starts increased by 3.1 per cent, to 74,685 units.
Rural starts were estimated at a seasonally adjusted annual rate of 18,046 units.

read more CMHC

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell
Dean Popplewell

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