Highlights:
- March housing starts dropped 2.5% to 225.2k from an upwardly revised 231.0k in February.
- The overall decline mainly reflected urban multiples dropping 7.3% to 144.6k which more than offset urban single-detached units rising 9.5% to 63.7k. Rural starts held steady at 17k.
- Regionally starts in Ontario dropped 30.4% in March to 71.6k though this only partially reversed a cumulative increase of 68.8% over the prior two months that had left February starts at a robust 102.8k.
Our Take:
Canadian housing starts moved lower in March to 225.2k from the 231.0k recorded in February. However, the average level in the first quarter of 224.3k is still representative of strong new residential investment. It is only down slightly from the 229.4k recorded in Q4 which represented the highest level of activity since 2007. This continued strong housing construction activity has persisted despite rising interest rates, more restrictive mortgage lending and poor affordability in a number of key local housing markets. These factors have started to put downward pressure on housing resales so far in 2018. Our expectation is that these factors will start to have a dampening impact on new construction going forward with starts dropping below the 200k level by the end of 2018.
