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Economic News: Canada - 224.9K Housing Starts In August

ByThe National Bank of Canada
Published 09/12/2012, 08:05 AM
Updated 05/14/2017, 06:45 AM
FACTS:

In Canada, for an ninth month in a row, housing starts exceeded 200K units at an annual rate in August (top chart), reaching 224.9K, a 16.9K or 8.1% increase from July. In August, urban starts advanced 19.1K or 10.2% to 205.9K. Starts in rural areas dropped 2.2K or 10.4% to 19.0K. Urban single family starts edged up 0.1K to 64.3K, while multiple starts jumped 19.0K or 15.5% to 141.6K.

On a regional basis, starts increased in 5 out of 10 provinces, that is, Nova Scotia (+3.7K), Ontario (+14.8K), Manitoba (+2.5K), Saskatchewan (+1.4K) and B.C. (+4.6K). They were flat in New Brunswick and declined in the other provinces.
Starts in August above 200K for a ninth month in a row
Alongside Toronto and Vancouver, Montreal resale
Subtract from economic
OPINION: According to the CMHC, August’s surprising rise in housing starts is mostly due to a few, large, multi-unit projects in the Greater Toronto Area (GTA), reflecting high presales in late 2010 and early 2011. The higher level of starts recorded in Nova Scotia and British Columbia is a recovery from low activity in July. Despite August’s overall rise in Canada, we still expect housing starts to moderate over the rest of the year and next year.

Among other things, our opinion is based on the fact that the resale market is now a buyers’ market in the Greater Vancouver, while the GTA condo apartment resale market clearly softened lately (see our Hot Chart published on Sept. 6). In August, we estimate that the Montreal condo resale market also softened, (middle chart), as active listings were up 17% from a year ago, while sales were down 8%. The new mortgage rules also enter into account. For the time being, even with the rise in August, housing starts are subtracting from economic growth so far in Q3 (bottom chart).

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