Annual pace slowed in January
The deceleration in Canada housing starts witnessed at the beginning of 2024 suggests a moderation in the pace of homebuilding is likely to continue, according to TD economist Marc Ercolao, even though the annual rate remains above historical averages.
January saw housing starts post a 10% month-over-month reduction in annual pace compared with December.
According to Canada Mortgage and Housing Corporation (CMHC) data, January saw Canadian housing starts decline to 223,600 units on an annualized basis. This drop came after a period of rebound in December. It also caused the six-month moving average of housing starts to fall to 244,800 units, marking the second consecutive month of downturn.
“Today’s print supports our view that near-term starts will remain subdued in spite of the recent strength in home sales,” said Ercolao.
In addition to the decline in housing starts, CMHC reported that multi-family urban starts were down 14% month-on-month, with January figures falling to 191,500 units.
Meanwhile, urban single-detached starts showed no month-on-month variation, remaining at 43,300 units.
The trend in urban starts also varied across provinces, with seven out of ten provinces reporting a decrease.
British Columbia experienced the most significant decrease, with starts dropping by 31,000 units. Conversely, Ontario saw an increase of 11,800 units, while Quebec's numbers remained relatively unchanged.
In the Atlantic region, housing starts decreased by approximately 5% to 12,100 units, with Nova Scotia and New Brunswick leading the decline.
Given these figures, Ercolao said the market isn’t likely to see any immediate shifts. However, potential adjustments in the Bank of Canada’s policy rates could “add some fuel to existing home sales in the coming months, potentially propping up new home building as a result.”
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