The Canadian housing starts report from the Canada Mortgage and Housing Corp released Tuesday showed the seasonally adjusted annualized rate of housing starts declined to 198,395 in July, down from a revised 218,326 in June. Construction of multiple units fell 13.3 per cent.
Housing Starts, Canada
The expected fallback in Canadian housing starts in June was broadly based, according to the CMHC report, with groundbreaking on new detached homes down by a more modest 1.8 per cent, and starts falling in all regions of Canada except the Prairies.
Hot housing markets in Canada’s two largest cities, Toronto, ON, and Vancouver, BC, have sparked some fears of a housing bubble, even as other markets cool amid a slump in commodity prices that has weighed on the nation’s economic growth.
The six-month trend of housing starts edged up to 201,936 units in July, continuing a strong pace of home- building that has been one of the few bright spots in Canada’s economic growth in recent years.
A sharp contraction in multiple-unit starts – typically condos – last month led July’s decline, with urban multiple starts down 13.3 per cent compared to a milder 1.8 per cent dip in starts of single family homes.
Multiple starts had surged more than 25 per cent in June. While the data is notoriously volatile from month to month, building permits have been declining and analysts believe it is only a matter of time before construction slows as well.
“It’s hard to see starts pushing higher than where they’ve been year to date,” said Derek Holt, head of capital markets economics at Scotiabank, forecasting starts will eventually cool toward the 150,000-unit pace.