- Canadian housing starts came in at a very healthy 282.1k annualized units in June, marking a modest 1.5% m/m decline from May’s superheated level. Despite the decline, the six-month moving average remained exceptionally strong at 293.6k units.
- June’s decline in urban starts was driven by the single-detached category, which fell 8.5% m/m to 60.1k units. Meanwhile, multi-family starts increased by 0.6% m/m to 191.1k units.
- Starts were lower in six of 10 Provinces:
- In Ontario, starts fell back from their extremely strong May level (-12.8k to 89.0k units)
- Starts fell by 4.0k units in the Prairies, leaving their level at 45.7k units. Alberta and Saskatchewan were the drags.
- In the Atlantic Region, starts plummeted from their historically strong May level (-9.4k to 9.7k units), weighed down primarily by Nova Scotia and New Brunswick.
- Starts increased by 1.4k in Quebec to 69.6k units and jumped by 20.5k to 68.1k units in B.C.
Key Implications
- Starts remained very strong to begin the summer, supported by elevated home prices and low interest rates. For context, June’s figure was a meaty 40% above the 2011- 2019 average. However, they did recede by 8% in the second quarter from their record first quarter pace, consistent with our forecast calling for residential investment to be a drag on overall economic growth for the first time in a year.
- Moving forward, we expect starts to continue to cool from their exceptionally strong first half pace (and May’s drop in residential building permits is consistent with this view). However, the level should remain strong compared to the pre-pandemic trend, as homebuilding continues to benefit from past sales gains. What’s more, unsold inventories remain extremely low (falling yet again in June), and lumber prices have receded significantly in recent months.
