Canada Housing October 2019

Canada

Canada: Housing starts dip in October

November 8, 2019

Housing starts fell to 201,973 units on a seasonally-adjusted annualized rate (SAAR) basis in October, according to the Canada Mortgage and Housing Corporation (CMHC), down from September’s downwardly revised 221,135-unit reading (previously reported: 221,202), and well below analysts’ expectations of 221,200 units. October’s decline was driven by a steep fall in multiple urban starts, which was only marginally offset by an increase in single-detached urban starts.

Meanwhile, the six-month average of housing starts on a SAAR basis ticked down to 218,598 units in October from 223,276 units in September. Nevertheless, October marked the fifth consecutive month of housing starts above the 200,000-unit mark, which likely suggests residential investment will continue to positively contribute to economic growth in H2 this year following an increase in the second quarter—the first rise in residential investment since Q4 2017. Going forward, solid population growth, lower borrowing costs, increased government measures supporting first-time home buyers, robust wage growth and a tight labor market should continue to drive housing starts.

Commenting on October’s print, Rishi Sondhi, an economist at TD Economics noted, “In their latest interest rate decision, the Bank of Canada flagged housing activity as a key sector to watch for signs of continued resilience in the economy. On this score, today's report is a positive sign.”

In its annual Housing Market Outlook released in October, the CMHC projected housing starts would range between 194,000–204,300 units in 2020 and between 192,900–206,300 units in 2021. FocusEconomics Consensus Forecast participants, meanwhile, expect 202,100 housing starts in 2020, before moderating to 194,200 units in 2021.


Author:, Economist

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Canada Housing Starts October 2019 1

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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