- Canadian housing starts were close to expectations, falling to 202k annualized units in May from 233k in April
- The six-month trend was also 202k, which is the slowest pace in more than two years
- May’s pullback was concentrated in multi-unit starts though the trend in that component remains solid
- Starts fell sharply in Ontario to retrace a significant increase in the previous month
- A separate report saw building permits jump to their highest level since 2005, largely due to a surge in BC ahead of an increase in development costs in Vancouver
Homebuilding has picked up in the current quarter after wintry weather held starts to a four-year low in Q1. But even with stronger activity in the last two months, starts are tracking around 200k year-to-date, short of the 213k and 220k pace in 2018 and 2017, respectively. This moderation has lagged a much more significant slowdown on the home resale side. It’s not surprising that starts have held up fairly well given the supply shortages in several major markets that have hurt affordability. We expect starts will continue to slow gradually as the year progresses, albeit remaining at fairly solid levels thanks to ongoing strength in the multi-unit segment.
