Canada: Housing starts dip below 200,000-mark in May for the first time in a year
June 8, 2018
Housing starts on a seasonally-adjusted annualized (SAAR) basis plummeted to 195,600 units in May, according to the Canada Mortgage and Housing Corporation (CMHC). Declining from April’s 216,800 units, May’s reading ended an eleven-month streak of housing starts above the symbolic 200,000-unit threshold. Furthermore, May’s surprising outturn came in well below analysts’ expectations of a narrow rise to 218,000 units.
May’s reading reflected a sharp contraction in multi-unit urban starts as new mortgage-lending rules continued to chill the once-hot market. A breakdown by city showed that Toronto recorded a steep drop in multi-unit groundbreaking, as did Montreal. On the other hand, Vancouver posted robust gains in the month. Overall, the decline in May brought multi-unit urban starts closer to their long-run average following several months of elevated readings. Highlighting the sensitivity of multi-unit urban groundbreaking to the newly-implemented guidelines, single-detached starts recorded a modest rise in May.
Meanwhile, the six-month moving average of housing starts (SAAR) ticked lower in May from the near-decade records set earlier this year, easing from 225,500 units to 216,400 units.
A separate report, released by Statistics Canada, showed that the value of Canadian building permits fell sharply in April—the most recent month for which data is available. April’s 4.6% fall in building permits from March was due to weakness in both the residential and non-residential sectors, particularly in Ontario.
Author: Christopher Thomas, Economist