The pace of building new homes in Canada slowed down in January, marking a 10% decrease from the robust activity observed in December. The Canada Mortgage and Housing Corp. (CMHC) revealed that the annual rate of housing starts for January was 223,589 units, compared to December's 248,968 units. This decline was particularly evident in multi-unit projects like apartments, condominiums, and townhouses.
Economist Marc Ercolao from TD Bank noted that the initial months of 2024 witnessed a moderation in housing starts, reflecting a pullback from the strong rebound experienced in December. Despite the slowdown, Ercolao emphasized that the current level of homebuilding remains higher than historical norms. He also pointed out that this trend supports the expectation of subdued housing starts in the near term, despite the recent surge in home sales.
Breaking down the figures, the annual pace of urban housing starts experienced an 11% decline, reaching 208,119 units. The drop was more pronounced in multi-unit urban starts, which decreased by 14% to 164,789 units, while single-detached urban starts increased marginally by 0.08% to 43,330 units.
Toronto bucked the trend with a 179% increase in the annual rate of housing starts, driven by a surge in multi-unit projects. However, Montreal saw a significant 28% decline, and Vancouver experienced a substantial 55% drop, primarily due to decreases in multi-unit starts. Meanwhile, the Kitchener-Cambridge-Waterloo region in Ontario witnessed an 88% decrease, and Ottawa declined by 64%. Edmonton experienced a 53% drop in housing starts, whereas Calgary saw a 39% increase compared to December.
In the rural areas, the annual rate of housing starts was estimated at 15,470 units. CMHC highlighted that the actual number of housing starts in urban centers across Canada increased by 13% in January, reaching 14,878 units compared to 13,220 in January 2023.
Despite the overall decrease, CMHC Chief Economist Bob Dugan offered a positive perspective, stating that January still marked the second-highest number of housing starts since 1990. Dugan emphasized that this suggests a robust housing market, even with the month-over-month decline.
The six-month moving average of the monthly seasonally adjusted annual rates of housing starts for January stood at 244,827 units, indicating a 2% decrease from December 2023's 249,757 units. This metric provides a more stable view of the housing market trends, smoothing out short-term fluctuations.
In summary, while the Canadian housing market experienced a slowdown in January, the overall picture remains relatively strong. The decline in housing starts, especially in multi-unit projects, is seen as a natural correction after the surge observed in December, with the market still performing well compared to historical standards.
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