Weaker sales and delayed projects are leading to double-digit movements in the value of Canadian building permits
The value of Canadian building permits fell abruptly in May, mainly due to weaker demand for condo construction in Ontario, according to the latest data from Statistics Canada.
During that month, the total value of construction permits declined by 14.8% from April, ending up at a seasonally adjusted $9.47 billion.
Much of the drop was due to the residential building segment, which saw permit values shrink by 16% monthly to $6.5 billion in May.
In its analysis of the StatsCan figures, housing information portal Better Dwelling attributed this development to flagging sales activity and project delays spurred by the rising costs of crucial materials, such as lumber.
Figures from the Canadian Real Estate Association showed that on a month-over-month basis, sales slowed down by 11% in April and by 7.4% in May.
Read more: RBC on new home construction in Canada
The decline in total permit values accompanied considerably muted housing starts performance. The standalone monthly seasonally adjusted annual rate (SAAR) of housing starts across all Canadian markets was 275,916 units in May (up by only 3.2% monthly), according to the Canada Mortgage and Housing Corporation.
CMHC noted that the starts trend was held back by some weaknesses in several key markets.
“Toronto, Vancouver and Montreal starts trended lower in May, as these markets continued to moderate from the historical highs recorded in the first quarter of the year,” said Bob Dugan, chief economist at CMHC.
