Multifamily sectors bear the brunt
Housing starts declined across all regions of Canada as the country's residential construction sector continues to face economic headwinds.
The total seasonally adjusted annual rate (SAAR) of housing starts fell 7% to 242,195 units in March, down from 260,047 units in February, according to data from the Canada Mortgage and Housing Corporation (CMHC).
The six-month trend, which represents a moving average of the SAAR of total housing starts, also decreased from 247,971 units in February to 243,957 units in March.
In urban centres with populations over 10,000, the actual number of starts rose by 16% year-over-year in March, driven by an increase in multi-unit starts, which climbed by 19%.
Read more: Apartment construction surges in major Canadian cities
Despite this increase, the month saw a 7% drop in total urban starts to 220,743 units. Within this figure, multi-unit urban starts decreased by 8% to 180,229 units, while single-detached urban starts fell by 4% to 40,514 units.
“The slight decline in multi-unit housing starts in March likely just reflects the volatile nature from one month to the next of these large projects,” said Kari Norman, an economist at Desjardins.
However, economists warned that further decreases in housing starts are likely in the coming months.
“While governments are actively looking for ways to enhance supply, we think that housing starts are likely to decline further this year on the back of more recent weakness in pre-sales activity,” said Rishi Sondhi, an economist at TD Bank.
On a regional basis, starts were up 27% in Vancouver but fell 26% in Toronto and 5% in Montreal, all due to decreases in multi-unit construction.
“Looking forward, the gradual unwinding of interest rate hikes expected to begin this June will bring cautious optimism to housing starts,” Norman said. “However, this optimism is tempered by challenges such as construction labour shortages, inflation in building materials costs and weaker homebuilder sentiment.”
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