Soft demand and elevated inventory prompting builders to continue slowing production: CMHC

Mario ToneguzziThe number of housing starts in the Calgary and Edmonton regions were down significantly in March compared with a year ago.

Statistics released on Monday by Canada Mortgage and Housing Corp. show that single-detached starts in the Calgary census metropolitan area dropped by 39 per cent year over year to 186 units while all other housing categories saw a 36 per cent decline to 334 units.

“A combination of soft demand and elevated inventory has prompted builders to continue slowing down production. The exception is row starts, which have increased year over year by 48 per cent in the first quarter. As economic challenges persist, prospective buyers are seeking more affordable options in the market,” said CMHC.

In the Edmonton census metropolitan area, single-detached starts were down 29 per cent from last year to 260 while all other housing categories saw a drop of seven per cent to 260 units.

Nationally, CMHC said there were 202,279 housing units started in March, compared to 202,039 units in February 2019. This measure is a six-month moving average of the monthly seasonally adjusted annual rates of housing starts.

“The national trend in housing starts was essentially unchanged in March, remaining near its historical average,” said Bob Dugan, CMHC’s chief economist, in a statement. “The trend has been very stable since the final quarter of 2018, following a period of steady declines from the historically elevated levels registered in recent years. Higher mortgage rates combined with still-favourable, but less stimulative economic conditions have contributed to moderation in demand for new homes in urban centres.”

CMHC said it 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.

“While housing activity will remain a drag on GDP growth this year, with the six-month trend in starts still signalling a slowing, today’s data suggest that February’s pace was likely depressed by even colder than normal temperatures in some parts of the country,” said economist Andrew Grantham with CIBC Economics.

– Mario Toneguzzi

housing starts

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