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News » Canada » Housing starts continue to rise » published 13 Jul 2017

Housing starts continue to rise

Housing starts continued to rise in June according to latest findings from Canada Mortgage & Housing Corporation (CMHC).

The figure for housing starts was 215,459 units in June, compared to 214,570 units in May. CMHC uses a trend measure - a six-month moving average of the monthly seasonally adjusted annual rates (SAAR) of housing starts.

“The trend in housing starts for Canada reached its highest level in almost five years”, said Bob Dugan, CMHC’s chief economist. “So far this year, all regions are on pace to surpass construction levels from 2016 except for British Columbia, where starts have declined year-to-date after reaching near-record levels last summer.”

Prince Edwards Island’s housing starts continued to trend up during the month of June. Starts of single family homes have been particularly strong the first six months of this year, up 97% compared the same period in 2016.

In June, housing starts trended higher in Québec as a result of the construction of a large condominium project. However, in the conventional rental housing segment, year-to-date results show a 22% decrease in housing starts compared to the same period in 2016. This decrease can be explained, in part, by the period of strong activity observed in this segment in 2015 and 2016 and the rise in the vacancy rate.

The total housing starts trend in the Toronto Census Metropolitan Area (CMA) remained virtually unchanged in June compared to the previous month. The pace of new home construction has been stable across all housing forms. A minor decline in the single-detached starts trend was offset by gains in the multi-family sector. Glancing further back, construction of ground-oriented homes, which includes single-detached, semis and town homes, have gained momentum throughout 2017, as housing starts so far this year have reached a five-year high. Limited resale supply in combination with strong home buying demand in Toronto have led more buyers to purchase pre-construction units.

Higher trending single-detached and row starts have pushed Barrie’s total housing starts up for the second month in June. Demand for new homes continued to fuel home starts in the town of Innisfil instead of the land-scarce city of Barrie. The town of Innisfil has become the prime location for the construction of low and medium-density homes in the Barrie CMA.

Oshawa had a record level of seasonally adjusted starts in June 2017, the pace of construction being nearly three times higher than the average seen over the past three years. While all housing types saw increases in June, the row and apartment segments were the clear leaders. Price weary buyers from the Toronto CMA continue to fuel demand for new homes in Oshawa.

Fort McMurray has experienced strong rebuilding activity after the wildfires last May. Since January, 785 housing starts have been recorded, twice as many as in the last two years combined. The majority of these new starts have been replacement single detached homes.

Housing starts trended higher in the Victoria CMA last month as new rental projects were initiated in Langford. Total starts for 2017 remain elevated but reduced from the record-setting pace last year. Multi-unit starts have been sluggish to date compared to singles, which are slightly above expectation. However, multi-unit construction remains elevated at 30% above the five-year average. Developers will be keeping an eye on how the market responds to a higher completion rate going forward.

Vancouver CMA housing starts trended downwards in June, driven by a decrease in apartment starts. In the first six months of 2017, there were 880 ownership apartment starts in the City Vancouver, compared with 3,290 in the first half of 2016. Given the strong housing starts activity in the past year and the record number of units now under construction, it is not surprising to see starts trend downward according to industry capacity.

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 212,695 units in June, up from 194,955 units in May. The SAAR of urban starts increased by 9.6% in June to 194,773 units. Multiple urban starts increased by 9.4% to 127,944 units in June and single-detached urban starts increased by 10.1%, to 66,829 units.

Rural starts were estimated at a seasonally adjusted annual rate of 17,922 units.

 

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This article was published on 13 Jul 2017 (last updated on 13 Jul 2017).

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