Canada Housing August 2018


Canada: Higher borrowing costs hit housing starts in August

September 8, 2018

Housing starts on a seasonally-adjusted annualized (SAAR) basis moderated to 201,000 units in August, according to the Canada Mortgage and Housing Corporation (CMHC). August’s reading followed a 205,800-unit reading in July, landing above the symbolic 200,000-unit threshold for the fourteenth time in 15 months but well below analysts’ expectations. Although the pace of groundbreaking remained elevated by historical standards, the number of multi-unit urban starts fell as the Toronto and Montreal markets retreated, as did Vancouver.

Meanwhile, the six-month moving average of housing starts (SAAR) eased in August, dipping to 214,600 units from 219,700 a month earlier—walking back the near-decade records set earlier this year as rising borrowing costs increasingly put off homebuilding.

A separate report, released by Statistics Canada, also showed that the value of Canadian building permits fell marginally in July—the most recent month for which data is available. Building permits declined by 0.1% from June as residential-sector intentions weakened in British Columbia.

In its annual Housing Market Outlook, released last October, the CMHC projected housing starts would range between 192,200–203,000 units this year and between 192,300–203,800 units in 2019. FocusEconomics Consensus Forecast participants expect 214,000 housing starts in 2018. For 2019, the panel sees housing starts moderating to 197,000 units.


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Canada Housing Chart

Canada Housing Starts August 2018

Note: Monthly housing starts and six-month trend in monthly housing starts, both at seasonally-adjusted annualized rate.
Source: Canada Mortgage and Housing Corporation (CMHC).

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