- Canadian housing starts declined 7.3% (m/m) to a reasonably healthy 195.2k units in March. This brought the 6-month moving average down to 204.7k from 209.1k in February.
- Declines were concentrated in multi-family units, where urban starts dropped -13.4% (m/m) to 124.1k units. In contrast, urban single-detached starts increased by 8.8% (m/m) to 58.5k units.
- Regionally, declines were broad-based, with starts down in 7 of 10 provinces. Starts were down in the Atlantic Region (-5.2k to 6.0k units, in urban centres). Urban starts were also lower in Saskatchewan (-0.3k units to 1.7k), Ontario (-9.8k units to 66.5k), B.C. (-7.8k units to 30.8k), and Quebec (-4.2k to 40.9k units).
- On the flipside, urban starts jumped in Alberta (+12.4k to 31.8k units), edged higher in Manitoba (+0.3k to 4.9k units) and New Brunswick (+1.5k to 2.9k units).
Key Implications
- The calm before the storm. Housing starts held up relatively well in March. However, the broad-based decline across provinces suggests that the COVID-19 pandemic is beginning to impact activity. The situation will only get worse in April. Indeed, in late March, the Quebec government deemed most construction activity “non-essential”. This action was also taken by the Ontario government more recently, although some reprieve is offered by the fact some already-permitted projects can commence. Moreover, Alberta’s strong gain in March is probably not durable.
- Notably, Statistics Canada released a flash estimate of building permits for March (covering about 30% of municipalities), this morning. Residential building intentions were down 35% (y/y) in the flash estimate, with substantial declines recorded in Ontario, Quebec and British Columbia.
- Homebuilding is poised to suffer a notable setback in the near-term as the pandemic weighs on construction. However, consistent with the broader economy, we anticipate stronger homebuilding activity in the second half of the year.
