The pace of Canadian housing starts slowed in April to the lowest level in three months, with Ontario and Quebec responsible for most of the pullback.
Canada Mortgage and Housing Corp. said Monday that the seasonally adjusted rate for housing starts last month was 191,512 units — down from 202,375 in March and 217,320 units in February.
Most regions saw increases in starts in urban areas on seasonally adjusted basis.
But Ontario’s seasonally adjusted rate for urban starts fell to 62,672 in April from 85,518 in March, while Quebec also saw a decline, with urban starts falling to 27,423 from 29,696.
Economists at some of Canada’s biggest banks noted that one month does not make a trend.
“Keep in mind that new units in the province, or more specifically, the GTA, tend to come in waves,” BMO economist Robert Kavcic said of the huge Greater Toronto Area market.
“We saw a run-up in new construction in 2011 and 2012 that then got absorbed during a lull through 2014,” Kavcic said in a note. “Then another burst of activity came through 2015 which might now be settling down while inventory gets sold.”
TD economist Diana Petramala said Ontario housing starts are coming off relatively strong levels in March.
“A number of factors, including changing weather patterns, the ins and outs of the permitting process and a high degree of volatility in multi-unit construction creates a significant amount of volatility on a monthly basis,” Petramala said in a note to clients.
She added that wildfires in Fort McMurray, Alta., will likely create some volatility in housing starts data going forward.
“There will likely be a larger than normal decline in housing starts in Alberta next month as a significant amount of the province’s resources will be devoted to fighting the wildfires and supporting those that have lost their homes,” Petramala said.
“But, reconstruction efforts will likely temporarily boost starts in the following months.”
In terms of types of housing, urban multiple-dwelling starts fell by 4,945 to 117,851 and single-detached housing starts fell by 3,522 to 56,959. The seasonally adjusted rate also fell in rural areas to 16,702 from 19,098.
The CMHC’s six-month trend in April was 195,064 units — down from 196,103 in March.
RBC economist Josh Nye said he expects that the moderation seen in April will persist.
That means investment in residential real estate will likely be a “modest drag” on overall GDP growth in the second quarter of the year, said Nye.
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Note to readers: This is a corrected story. An earlier version had the incorrect figure for multiple-dwelling starts and used an outdated figure for February starts.
