Canadian Housing Starts: April Statistics

Canadian Mortgage and Housing Corporation (CMHC) estimates that housing starts fell 3.1% to a seasonally adjusted annualized rate of 179,000 from a revised down 184,700 units in March. Starts were originally reported at 188,800 in March. Total urban starts decreased by 1.9% to 160,100 units. Urban multiple starts fell 5.1% to 96,000 units in April. Urban single-family starts bumped up by 3.4% to 64,100 units. Much of the monthly drop in total starts can be attributed to a decline in residential construction activity in Newfoundland, Ontario and Quebec.

Outlook
New residential construction slowed in April after two months of moderate gains. The recent run in multi-family construction has halted and is the main contributor to the overall monthly decline. Nonetheless, at 96,000 units, multi-family starts are still above their 5- and 10-year average.

The positive news is that single-family construction picked up in April. Demand for single-family units has faded in most of the nation from what was seen in the first half of 2010. Rising home prices and the implementation of the HST in British Columbia and Ontario on July 1 of last year could be partly to blame, but tighter mortgage rules (as of March 2011), will likely hold back some activity moving through the year.

Newfoundland and Labrador, Ontario and Quebec posted declines in housing starts in April, primarily due to a drop in multi-family housing construction, but homes started in New Brunswick doubled from March. However, the monthly gain in New Brunswick was still not enough to lift new home construction in the province from the depressed levels that began in the second half of 2010. With the exception of Ontario and Saskatchewan, total housing starts were down in every region from year-ago levels.

 Overall, the monthly decline did not come as a big surprise as multi-family starts were expected to moderate from the elevated levels last month. New housing construction continues to show weakness from activity seen before the economic slowdown. We anticipate this to continue until the second half of the year.