Canadian housing starts rose to 223k units in October (on a seasonally adjusted annualized basis), up from 219k units in September. The 6-month moving average increased to 217k (previously 215k).
The increase was concentrated in the multi-unit segment, with starts up 12.5% month-on-month, following a decrease during the month prior. Meanwhile, single-family starts fell by 17% in October.
Ontario (-18k) continued to be a weak spot, with homebuilding activity declining sharply for a second consecutive month. Starts in Ontario are now down nearly 40% from August’s robust level. On the flipside, B.C. (+16k) and Quebec (+8k) recorded solid increases in new home construction.
Housing starts in Toronto (-7k) also declined for a second straight month while starts in Vancouver nearly doubled, reaching a 12-month high. The gains in Vancouver were driven by the multi-unit segment.
Key Implications
Ontario might be a weak spot, but healthy activity elsewhere helped starts pick up in October. And, with the 6-month moving average holding well-above the 200k mark, activity remains at quite healthy levels.
Going forward, the impact of recent interest rate hikes – plus a strong possibility of another early next year – combined with the recently announced B20 regulations which could also weigh on demand, will likely lead to further declines in new home construction in the coming quarters. Indeed, we expect starts to gradually trend down toward the 190k mark over the next year, roughly consistent with demographic demand.
