The trend in housing starts has been declining steadily since November 2022 and in May, the trend was 230,205 units, down 4.2 per cent from 240,318 units in April, reported Canada Mortgage and Housing Corporation on Thursday.
Expect Best
The trend measure is a six-month moving average of the monthly SAAR of total housing starts for all areas in Canada.
The federal agency said the standalone monthly seasonally adjusted annual rate (SAAR) of total housing starts for all areas in Canada declined 23 per cent in May (202,494 units) compared to April (261,357 units). The rural starts monthly SAAR estimate was 19,652 units.
It said the monthly SAAR of total urban starts (centres 10,000 population and over) declined 24 per cent, with 182,842 units recorded in May. Multi-unit urban starts declined 30 per cent to 139,890 units, while single-detached urban starts increased six per cent to 42,952 units. The Vancouver, Toronto, and Montreal CMAs all recorded declines in total SAAR housing starts in May, with Vancouver down 45 per cent, Toronto down 28 per cent, and Montreal down 35 per cent. All three recorded increases in single-detached starts that were offset by large decreases in multi-unit starts.
“We observed declines in both the SAAR and the trend of housing starts in May,” said Bob Dugan, CMHC’s Chief Economist. “The decline in housing starts is due to constraints in new construction, including labour shortages and higher construction borrowing costs, which is considerably affecting multi-unit starts. Despite this, starts have only declined to the relatively high levels observed prior to 2020.”
Rishi Sondhi, Economist with TD Economics, said starts continued their downward trend last month.
“This is in line with our expectations, as past declines in home sales continue to feed into falling construction activity. This is also consistent with permit issuance, which has dropped to 2019 levels, before the pandemic-induced runup in demand and construction,” he said.
“That said, starts are volatile and not every data point will move in a straight line downwards. Even with today’s decline, starts are tracking four per cent higher than their first quarter average thanks to an April pop. This, alongside what will likely be a super-sized gain in home sales should generate a positive second quarter growth print for residential investment, supporting the overall economy.”
Mario Toneguzzi
(Mario Toneguzzi is Managing Editor of Canada’s Podcast. He has more than 40 years of experience as a daily newspaper writer, columnist, and editor. He was named in 2021 as one of the Top 10 Business Journalists in the World by PR News – the only Canadian to make the list)
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