- In April, Canadian housing starts dropped 19.8% from March’s record high, although they still came in at a rock solid 268.6k units. On a six-month moving average basis, starts were extremely elevated at 279.1k units.
- April’s decline in urban starts was concentrated in multi-family (-22.8% m/m) units, with the single-detached category flat on the month.
- Starts were lower in 6 of 10 provinces:
- Starts fell back from their record level, but were very strong in Ontario (-23.0k to 107.4k units). They declined by the most of any province in B.C. (-32.7k to 38.3k units).
- In the Prairies, starts climbed by 3.5k to 44.7k units on the back of a 3.9k gain in Alberta (to 33.1k units), which was partially offset by falling starts in Saskatchewan.
- In Quebec, homebuilding was solid, but slower than March’s outsized pace, as starts dropped by 15.1k to 68.0k units.
- Starts in Atlantic Canada came in at 10.3k units, up from 9.0k units in March. New Brunswick drove the gain.
Key Implications
- Like clockwork, April was yet another in a series of strong months for starts. The backdrop for homebuilding remains favourable (soaring lumber prices and slow population growth notwithstanding), as housing demand is strong and prices are high. In addition, interest rates and unsold new inventories (which fell even more in April) are low. And, with building permits currently sitting at multi-year highs, further near-term gains are in store for both singles and multi-family family units.
- Moving past the near-term, we anticipate some moderation in starts as demand comes off the boil and interest rates rise. Purpose-built rental construction has been an important driver of homebuilding. For example, they accounted for 1/3rd of starts in the first quarter – matching a multi-decade high. Looking forward, an anticipated pick up in population growth should support rental demand, although soft growth in rents and high vacancy rates in several key markets present challenges.
