Canadian housing starts rise strongly in March, homebuilding pace to pick up slightly in near-term

Canada’s housing starts grew in the month of March. Sequentially, starts rose 16 percent to 192.5k units in March, following a downwardly revised 166.3k print in the prior month. On a six month moving average basis, starts rose 202k units, almost exactly on par with February.

Single-detached and multi-family starts came in higher in March. Urban single-detached starts rose 10 percent sequentially to 52.9k units while construction of urban multi-family units rose 18 percent sequentially to 139.7k units.

Homebuilding rose in six provinces out of ten. Starts rose 60 percent sequentially to 60.4k units in Quebec – the highest level since 2012. In the meantime, starts rose but remained relatively low in Ontario. Starts also rose in Manitoba, Saskatchewan, Nova Scotia and New Brunswick. Meanwhile, starts fell in B.C. – the second straight fall. Starts also fell for the second straight month in Alberta. Housing construction came in flat in Newfoundland and Labrador while falling by 0.3k units PEI.

As anticipated, homebuilding shook off February’s weather induced chill, with starts rebounding nicely in March. Still, the prior month’s soft print left housing starts at 187.3k annualized units for the first quarter overall – the softest showing since 2015.

Looking ahead, the pace of homebuilding is expected to pick up a bit in the near-term, buoyed by ultra-strong population growth, low rental vacancy rates in key markets, and past gains in pre-construction sales, noted TD Economics in a research report. The expectation is in line with permits, which continue to be healthy in spite of the fall in February reported this morning.

“We look for homebuilding to trend lower in 2020, as more recent softness in home sales and an inventory overhang in the Prairies causes it to pull back”, added TD Economics.

At 14:00 GMT the FxWirePro's Hourly Strength Index of Canadian Dollar was bullish at 77.1272 while the FxWirePro's Hourly Strength Index of US Dollar was bearish at -79.8951 more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex