Market dynamics and trends
Despite a 10 per cent decrease in the standalone monthly SAAR of total housing starts for all areas in Canada, dropping to 254,966 units in July from June’s 283,498 units, total SAAR housing starts for all areas in Canada managed to outpace the five-year average by 7.4 per cent.
Bob Dugan, CMHC’s chief economist, acknowledged the recent fluctuations: “Despite a decrease in the SAAR of housing starts relative to last month, July saw a healthy number of actual housing starts from a historical perspective. This pushed the trend of housing starts upward for the second consecutive month. Market intelligence suggests multi-unit projects started in June and July were likely financed a few months prior, so the effect of the most recent interest rate hikes on housing starts remains to be seen.”
Urban vs. rural
The urban sector experienced a more pronounced decline, with the monthly SAAR of total urban starts, covering centers with populations over 10,000, decreasing by 11 per cent in July, reaching 234,857 units.
Multi-unit urban starts bore the brunt of this decline, falling 12 per cent to 193,446 units, while single-detached urban starts saw a milder contraction of 4.0 per cent, totaling 41,411 units.
In contrast, the rural starts monthly SAAR estimate stood at 20,109 units.
Geographically, the landscape of housing starts saw varying trends. The Vancouver and Toronto Census Metropolitan Areas (CMAs) observed declines in total SAAR housing starts, with Vancouver experiencing a 23 per cent drop and Toronto seeing a 29 per cent decrease, while the Montreal, Calgary and Edmonton CMAs defied the overall trend, recording respective increases of 12 per cent, 33 per cent, and 67 per cent in total SAAR housing starts.
An economist’s take
Katherine Judge, an economist at CIBC Economics, adds her insights to the discussion. She points out that while the pace of homebuilding cooled to 255,000 units in July, it still exceeded the consensus expectation of 244,000 units.
She adds, “Both single-family and multi-family housing starts weakened, and the decline was concentrated in Ontario and B.C., while other provinces generally saw building pick up. Still, the softer trend to building permits this year suggests that building will come under more pressure ahead, with demand being thwarted by high-interest rates.”