- Total house starts increased to 246k from 197k in May
- Gain widespread across regions
- Permit issuance slowed 234k in May after April surge
Canadian homebuilding continues to chug along at elevated levels – still suggesting that significantly slower resale markets over the last year have had limited spillovers into homebuilding activity. Part of the latest monthly jump may have had something to do with an earlier surge in permit issuance in B.C. in April. And that had more to do with a rush to get ahead of higher development costs in Vancouver than rising home demand on net. But starts excluding B.C. were also still up 30% in June to more-than-retrace a 20% drop in May. And permits issued in May (released separately today) remained elevated at an annualized 234k despite BC more-than-retracing a huge 71k surge the prior month.
We still think that homebuilding will ultimately drift lower going forward given the earlier easing in resale markets. Overall household spending is also likely to remain lackluster – but perhaps less than expected just a few months ago given recent declines in market interest rates. At a minimum, the housing data has been in line with our economic reports for Canada that broadly suggest economic growth has bounced back somewhat after bad weather and disruptions to oil production weighed on growth over the winter.
