In a shiny fresh new year, home building activity in Canada and the US continues along the waffly path each experienced in 2014. Curiosity about where home building will be through this year abounds.
Much of the growth in multi-residential starts came from a jump in construction of rental apartments in Edmonton, which hit a 25-year monthly high according to National Bank of Canada. In Calgary, multi-residential starts fell 51 per cent in January compared to the month before.
In Depth
Canadian analysts were caught off guard by unexpected rise in housing starts. Bank of Montreal senior economist Benjamin Reitzes called the regional breakdown of strong growth in oil-dependent economies and slower growth in Central Canada “curious.”
Surprisingly, housing starts in the “energy-dependent” regions didn’t record a slump in starts, despite many forecasting a decrease.
“The expected slowing in housing starts in energy dependent regions in January failed to materialize, indicating that at this stage, the commodity price plunge is not yet negatively feeding through to confidence channels and into homebuilding activity,” wrote Royal Bank of Canada economist Laura Cooper.
“The increase in housing starts in January can be traced back to a surge of rental apartments started in Edmonton,” Marc Pinsonneault, senior economist with National Bank wrote in a report. “Given the deterioration in home resale market conditions in December and January as reported by Calgary and Edmonton real estate boards, housing starts in Alberta should trend down in the next few months well below the level reached in 2014.”
Elsewhere, investment in new Canadian housing construction totalled $3.7 billion in December, up 5.1 per cent from the same month a year earlier, according to Statistics Canada Friday.
The largest year-over-year advance occurred in Alberta, followed by British Columbia and Ontario. In Alberta, total investment in new residential building construction was up 16.7 per cent to $865 million. British Columbia saw an 11.3 per cent increase in spending to $633 million. In Ontario, investment rose 4 per cent to $1.2 billion. Conversely, Manitoba posted the largest decline, down 18.8 per cent, to $96 million).
At the national level, investment rose in all dwelling types. Single-family dwellings led the increase, with spending up 4.3 per cent from December 2013 to $2 billion in December 2014. Row houses followed, with a 12.8 per cent advance to $337 million. Spending in apartment and apartment-condominium building construction was up 3.3 per cent to $1.1 billion, while investment in semi-detached dwellings rose 12 per cent to $216 million.
Meanwhile in the US, builder confidence in the market for newly constructed, single-family homes dropped by two points in February to a level of 55, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index, released Tuesday, the measure has now hit the 50 mark for eight straight months.
“ According to the Bureau of Labor Statistics, the total number of construction jobs in the nation shot up by 39,000 in January on top of an impressive 44,000 increase in December. At a combined 83,000, this has been one of the fastest back-to-back jumps since the recession. “
– Alex Carrick, Reed Construction Data
”Solid job growth, affordable home prices and historically low mortgage rates should help unleash growing pent-up demand and keep the housing market moving forward in the year ahead,” said David Crowe, the trade group’s chief economist.
The current-sales component of the NAHB index dipped one point to 61. The index measuring expectations for sales over the next six months held steady at 60. A gauge of traffic from prospective buyers decreased five points to 39.
On a regional basis, the three-month moving averages for the index improved the most this month in the West, but slipped in the Northeast, Midwest and South.
Sales of previously owned homes, which account for roughly 90 per cent of the US market, rebounded somewhat in December after falling to a six-month low in November, the National Association of Realtors said.
As well, new home sales rose to their highest level in more than six years in December, the Commerce Department said last month.