Housing starts continued to trend upward in July
Experts noted that the impact of recent rate hikes are likely still unknown.
Key Takeaways:
- July saw a healthy number of actual housings starts from a historical perspective, said experts.
- The housing starts trendline increased for the second consecutive month.
- Toronto and Vancouver have been performing well this year compared to last.
The Whole Story:
Canada’s home builders may not yet be feeling the effect of the most recent interest rate hikes.
Bob Dugan, the Canadian Mortgage and Housing Corporation’s (CMHC) chief economist explained that the latest data on housing starts show historically positive activity, but these projects were not financed under current conditions.
“Despite a decrease in the seasonally adjusted annual rate (SAAR) of housing starts relative to last month, July saw a healthy number of actual housings starts from a historical perspective,” said Dugan. “This pushed the trend of housing starts upward for the second consecutive month. Market intelligence suggests multi-unit projects started in June and July were likely financed a few months prior, so, the effect of the most recent interest rate hikes on housing starts remains to be seen,”
According to CMHC, the housing starts trendline increased for the second consecutive month due to a healthy number of actual housing starts in July. The trend was 242,525 units, up 2.8% from 235,819 units in June, according to Canada Mortgage and Housing Corporation (CMHC). The trend measure is a six-month moving average of the monthly SAAR of total housing starts for all areas in Canada.
The standalone monthly SAAR of total housing starts for all areas in Canada decreased 10% in July (254,966 units) compared to June (283,498 units), which was the strongest month so far this year. Despite the monthly drop, total SAAR housing starts for all areas in Canada was 7.4% above the 5-year average.
The monthly SAAR of total urban starts (centres 10,000 population and over) decreased by 11%, with 234,857 units recorded in July. Multi-unit urban starts decreased 12% to 193,446 units, while single-detached urban starts decreased 4% to 41,411 units.
The Vancouver and Toronto CMAs saw decreases in total SAAR housing starts in July, with Vancouver down 23%, and Toronto down 29%. In contrast, the Montreal, Calgary, and Edmonton CMAs recorded respective increases of 12%, 33%, and 67% in total SAAR housing starts.
CMHC noted that Toronto and Vancouver have been performing well this year compared to last. Actual 2023 year-to-date housing starts were 35% and 49% higher than the same period in 2022 in Toronto and Vancouver respectively.
