Canadian housing starts trend decreases in August

The trend in housing starts was 214,598 units in August 2018, compared to 219,656 units in July, according to Canada Mortgage and Housing Corporation (CMHC). This trend measure is a six-month moving average of the monthly seasonally adjusted annual rates (SAAR) of housing starts.

“The national trend in housing starts continued to decline in August from the historical peak that was recorded in March 2018,” said Bob Dugan, CMHC chief economist. “This moderation brings total starts closer to historical averages, largely reflecting recent declines in the trend of multi-unit starts from historically elevated levels earlier in the year.”

In Toronto, total housing starts trended lower mainly due to fewer condominium apartment and single-detached home starts. Rising prices and land constraints have pulled back sales of pre-construction single-detached units over the past several years resulting in fewer single-detached starts so far in 2018 when compared to the same period in 2017. However, strong pre-construction sales of condominium apartments over the past couple of years have led to a higher level of condominium starts on a year-to-date basis, despite the pull-back in August.

Total housing starts trended higher in the Oshawa area, due to higher trending multi-family dwelling starts, particularly row units. August recorded the most actual row unit starts for the month in almost three decades. While demographic and economic conditions remain favourable, higher house prices in Toronto and surrounding areas continue to increase the popularity of relatively more affordable higher density housing in Oshawa.

CMHC uses the trend measure as a complement to the monthly SAAR of housing starts to account for considerable swings in monthly estimates and obtain a more complete picture of Canada’s housing market. In some situations analyzing only SAAR data can be misleading, as they are largely driven by the multi-unit segment of the market which can vary significantly from one month to the next.

The standalone monthly SAAR of housing starts for all areas in Canada was 200,986 units in August, down from 205,751 units in July. The SAAR of urban starts decreased by 2.5 per cent in August to 184,925 units. Multiple urban starts decreased by 2.4 per cent to 132,700 units in August while single-detached urban starts decreased by 2.6 per cent to 52,225 units.

Rural starts were estimated at a seasonally adjusted annual rate of 16,061 units.

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