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Canada Housing November 2019

Canada: Housing starts relatively stable in November

Housing starts picked up slightly to 201,318 units on a seasonally-adjusted annualized rate (SAAR) basis in November, according to the Canada Mortgage and Housing Corporation (CMHC), a tad higher than from October’s downwardly revised 200,674-unit reading (previously reported: 201,973), and below analysts’ expectations of 205,000 units. November’s rise was driven by an uptick in multiple urban starts, which was only marginally offset by a decrease in single-detached urban starts.

Meanwhile, the six-month average of housing starts on a SAAR basis climbed to 219,047 units in November from 218,253 units in October. Nevertheless, November marked the sixth consecutive month of housing starts above the 200,000-unit mark, which likely indicates residential investment should positively contribute to economic growth in Q4 this year following an increase in the past two quarters—which hit an approximately seven-year high in the third quarter.

Looking ahead, strong population growth, lower mortgage rates, increased government measures supporting first-time home buyers, robust wage growth and a tight labor market should continue to drive housing starts.

Commenting on November’s print, Rishi Sondhi, an economist at TD Economics noted, “Not too shabby […] However, it’s worth noting that starts have cooled from their very robust third quarter rate. And, the fact that November’s gain was narrowly concentrated does add a hint of negativity to the report.

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