Highlights:
- Housing starts slipped to a still-strong 217k annualized units in September from 226k in August. The year-to-date average of 217k is well above 2016’s 198k pace.
- The decline was in multi-unit starts although that component still posted its strongest quarterly pace on record in Q3. Single-unit starts picked up to a six-month high in September.
- On a regional basis, Ontario accounted for almost all of the monthly decline with starts pulling back following three consecutive monthly gains.
- In a separate report, building permits fell to 214k annualized units in August from 235k in July.
Our Take:
It was a busy summer for Canadian homebuilders with another 217k annualized housing starts in September capping off a strong Q3. Ontario finally saw a moderation in starts in September although it would be a bit of a stretch to attribute it to the recent slowing in resales – the province’s quarterly pace of housing starts was still the second-fastest in a decade. Meanwhile, starts remain elevated in other areas of the country that haven’t seen declines on the resale side. The upshot is that housing starts at the national level are running at their strongest pace in a decade through nine months this year – and well above most estimates of the underlying household formation rate. We continue to believe the recent pace won’t be sustained. However, with permit issuance remaining relatively strong in August, it may be a few months yet before we see a more trend-like pace of homebuilding emerge.
