Canada’s housing starts fall in March, likely to ease in near future

Canada’s housing starts fell in the month of March. Starts fell 2.5 percent sequentially from upwardly revised figure of 231k to 225.2k units. However, the rate of homebuilding remains elevated. The underlying trend in starts rose to 227k over the past six months. Single-detached starts rose 8 percent to 76.6k units with the gains countered by a fall in the multifamily segments, where starts dropped 7 percent to 148.6k units.

March’s fall was concentrated in Ontario. This was anticipated after starts recorded an unsustainable gain in February. Starts also fell in Nova Scotia and Saskatchewan. Meanwhile, starts were higher in most other provinces, led by B.C., Newfoundland and Labrador and Alberta. Starts were largely flat in PEI in March.

Starts were down markedly in Toronto, thanks to a fall in the multi-family sector from an unsustainably heated pace. Starts also fell in Montreal. On the contrary, starts were higher in Vancouver.

Homebuilding continues to defy gravity, with another solid print for starts in March. In the last six months starts have averaged a strong 227k, with healthy population gains and on-going economic growth boosting demand. Builders are also responding to past rises in pre-construction condo sales, a factor that should provide some support to starts going forward.

“While new housing construction is holding up, a plunge in home sales suggests that residential investment will subtract notably from Q1 growth. Going forward, starts will likely ease from their solid Q1 pace, in light of rising interest rates, regulation, and a softer price environment”, said TD Economics.

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