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Residential Market Commentary – June jump for housing starts

General Kaveh Seyedsagha 25 Jul

Housing starts in Canada bounced back in June, reversing a string of declines dating back to November of last year as mentioned by First National Financial LP

Canada Mortgage and Housing Corporation reports the seasonally adjusted annual rate of housing starts totalled 281,373 units in June, up from 200,018 in May.

The increase was led by multi-unit starts in urban areas, which rose nearly 60% to almost 220,000 units.  Single, detached urban home starts were up a mere 3%.  Almost half of the total number of starts were in Toronto and Vancouver.

The June jump is widely seen as hopeful, but temporary.

The longer-term trend, which looks at the six-month moving average of the seasonally adjusted annual rate, shows about 235,000 units were started in June, up just 2.4% from May.  Housing starts for the first half of the year were 8% lower than for the same period last year.

The building business in Canada has been weighed down by a worker shortage, lingering pandemic supply chain problems, high inflation and rising interest rates.  Slowing home sales have also seen some developers put projects on hold.

“The high interest rate environment continues to challenge housing starts through increasing borrowing costs,” said CHMC chief economist Bob Dugan in a statement.

In June of last year CMHC projected that, based on the rate of construction at the time, Canada would need to build 3.5-million more housing units by 2030, on top of what is already expected, in order to restore affordability.