Canadian housing starts blew away expectations, jumping to 23% m/m to 235.5k (annualized) units in April from an unrevised 192.5k units in March. On a six month moving average basis, starts ticked higher to 206.1k units from 202,4k units in March.
Both single-detached and multi-family starts were higher during April, although the gain was much stronger for the latter. Single-detached starts rose 6% to 56k units, building on March’s gain. Meanwhile, construction of multi-family units jumped 29% (+40k) to 179.5 units in April.
Homebuilding was higher in seven of ten provinces.
Ontario accounted for the majority of the national gain, with starts rising by 26.7k to 87.7k units. The bulk of Ontario’s increase came outside of Toronto, where starts increased by 5.9k to 38k units.
In the Prairies, homebuilding picked up in Alberta (+6.2k to 26.0k units) and Manitoba (+0.7k to 6.6k units) while dipping slightly in Saskatchewan (-0.1k to 1.8k units). Despite gains in Alberta and Manitoba in April, homebuilding remains soft in the Prairies, weighed on by soft economic conditions and inventory overhang.
Starts eased in slightly in Quebec (-6.0k units to 54.9k) after surging to their highest level since 2012 in March.
Starts increased in B.C. (+15.7k to 51.1k units), buoyed by a 13.0k gain in multi-family starts in Vancouver.
Starts were up modestly in the Atlantic Region (+0.3k to 7.4k units for the Region overall) , as gains in New Brunswick, PEI and Newfoundland and Labrador offset a drop in Nova Scotia.
Key Implications
Homebuilding got off on the right foot to begin the second quarter, consistent with our forecast for starts to tick higher after Q1’s weather-induced chill. The increase in Ontario is especially heartening, particularly after couple of soggy months in February and March. April’s healthy print also represents some catch up to permits, which have outpaced starts in recent months.
It’s early days, but April’s increase in homebuilding bodes well for residential investment and overall economic growth in Q2.
These positives aside, on a trend basis, home building has slowed from last year’s robust pace. This is consistent with our forecast calling for starts to cool in 2019. Still, the level should remain healthy, buoyed by ultra-strong population growth, solid labour markets, past gains in pre-construction sales and low rental vacancy rates in large urban markets. The recent drop in borrowing costs will also provide support, although with a lag.
