Canada Housing May 2018


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.

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 204,900 housing starts in 2018. For 2019, the panel sees housing starts moderating to 192,900 units.


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Canada Housing Chart

Canada Housing Starts May 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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