Canadian Data Release: Housing starts

Canadian Data Release: Housing starts dip in March but remain elevated

  • Canadian housing starts edged lower to 225.2k (annualized) units in March, down 2.5% from February’s upwardly revised figure (231k) but still an elevated pace of homebuilding. The underlying trend in starts ticked higher to 227k over the last six months.
  • Single-detached starts advanced 8% to 76.6k units with the gains offset by a decline in the multifamily segment, where starts were down 7% to 148.6k units.
  • March’s drop was concentrated in Ontario (-31k to 75k units). This was expected after starts posted an unsustainable gain in February. Starts also dropped in Nova Scotia (-2.3k to 3.1k units) and Saskatchewan (-1.4k to 2.2k units). On the flip side, starts were higher in most other provinces, led by B.C. (+15.5k to 49.4k units), Newfoundland and Labrador (+5k to 6.3k units) and Alberta (+3k to 37k units). Starts were largely flat in PEI during March.
  • Starts were down notably in Toronto (-33k to 38.3k units), owing to a drop in the multi-family sector from an unsustainably heated pace. Starts also declined in Montreal (-6.7k to 20.3k units). Conversely, starts were higher in Vancouver (+12.2k to 32.4k units).

Key Implications

  • Homebuilding continues to defy gravity, with another strong print for starts in March. Over the past six months starts have averaged a solid 227k, with healthy population gains and on-going economic growth providing a boost for demand. Builders are also responding to past increases in pre-construction condo sales, a factor that should provide some support to starts going forward.
  • In the first quarter, starts averaged 227k, about in line with their fourth quarter level. While new housing construction is holding up, a plunge in home sales suggests that residential investment will subtract notably from Q1 growth.
  • Going forward, starts will likely ease from their solid Q1 pace, in light of rising interest rates, regulation, and a softer price environment. However, recent permit issuance points to only a gradual moderation.