Canada Housing October 2017

Canada

Canada: Trend in housing starts ticks back up in October as Vancouver groundbreaking strikes one-year high

November 8, 2017

Seasonally-adjusted annualized housing starts registered 222,800 units in October, according to the Canada Mortgage and Housing Corporation (CMHC). October’s figure marked a 1.6% increase in housing starts from September’s revised 219,300 units (previously reported: +217,100 units), coming in above all of last year’s prints and marking five consecutive months of housing starts above the symbolic 200,000-unit threshold. Moreover, October’s reading surprised analysts, who had expected a decline from September to 210,000 units, and got groundbreaking in Q4 off on a strong foot.

October’s six-month moving average of housing starts ticked up 0.8% from September’s 215,200 units and came in at 216,800 units started. Driving the improvement in October was a double-digit rise in nationwide multiple starts—typically condominiums in the major cities—and were led by strong figures out of Vancouver. On the other hand, nationwide single starts, as well as single and multi-unit starts in Toronto, fell in the month. Groundbreaking across Ontario declined from a month earlier, sharply contrasting with the strong growth recorded earlier this year. Recently enacted provincial legislation intended to cool the runaway Ontario property market is the likely culprit for the ongoing malaise.

A separate report, released by Statistics Canada, showed that the value of Canadian building permits climbed in September for the first time in three months, bolstered by the strength of the non-residential sector. Residential permits, for their part, declined for a third consecutive month.

Dina Ignajatovic, Economist at TD Economics, commented that:

"Going forward, the impact of recent interest rate hikes—plus a strong possibility of another early next year—combined with the recently announced [G20-led] B20 [mortgage] regulations … will likely lead to further declines in new home construction in the coming quarters. Indeed, we expect starts to gradually trend down toward the 190,000-mark over the next year, roughly consistent with demographic demand."

In its annual Housing Market Outlook, released in October, the CMHC upgraded its housing start forecasts and now projects 192,200–203,000 units in 2018 and 192,300–203,800 units in 2019. FocusEconomics Consensus Forecast participants expect 195,800 housing starts in 2018. For 2019, the panel sees housing starts moderating to 186,400 units.


Author:, Economist

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Canada Housing Starts October 2017

Note: Monthly housing starts at seasonally-adjusted annualized rate.
Source: Canada Mortgage and Housing Corporation (CMHC).


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