Canadian housing starts advanced 16% m/m to 192.5k (annualized) units in March. This follows a downwardly revised 166.3k print in February (prior: 173.2k). On a six month moving average basis, starts came in at 202.0k units, almost exactly on par with February.
Both single-detached and multi-family starts were higher during the month. Urban single-detached starts advanced 10% m/m to 52.9k units while construction of urban multi-family units increased 18% m/m to 139.7k units.
Homebuilding was higher in six of ten provinces. Starts jumped 60% m/m to 60.4k units in Quebec – the highest level since 2012. Meanwhile, starts increased but remained relatively low in Ontario (+5.0k to 61.8k units). Starts were also higher in Manitoba (+0.3k to 6.1k), Saskatchewan (+0.3k to 1.9k), Nova Scotia (+1.3k to 4.9k units) and New Brunswick (+0.1k to 1.3k). On the other hand, starts dropped in BC (-3.4k to 35.4k units) – the second straight decline. Starts also declined for the second straight month in Alberta (-0.3k to 19.9k units). Housing construction was flat in Newfoundland and Labdrador while dropping by 0.3k units PEI.
Key Implications
As expected, homebuilding shook off February’s weather induced chill, with starts bouncing back nicely in March. Still, the prior month’s soft print left housing starts at 187.3k annualized units for Q1 overall – the softest showing since 2015.
Looking ahead, we expect the pace of homebuilding to pick up slightly in the near-term, buoyed by ultra-strong population growth, low rental vacancy rates in key markets, and past gains in pre-construction sales. Our expectation is consistent with permits, which remain healthy despite the decline in February reported this morning.
We look for homebuilding to trend lower in 2020, as more recent softness in home sales and an inventory overhang in the Prairies causes it to pull back.
