Canadian Housing Starts (August 2023)

Canadian housing starts remain elevated in August

• Canadian housing starts came in at 252.8k annualized units in August, representing a 1% month-on-month (m/m) dip from July's level. The six-month moving average of starts was flat at 244.5k units.
• August's mild decline was concentrated in the multi-family sector, with urban starts down 1% m/m to 191.3k units. Meanwhile, single-detached starts increased by 2% to 41.8k units.
• Urban starts were down in 4 of 10 provinces:
  • Starts were down in Ontario (-14.9k to 79.9k units) and edged lower in B.C. (-0.2k to 47.4k units). Starts also dropped in the Prairies (-1.8k to 49.8k units), driven lower by Manitoba.  
  • In contrast, there was a mild bump in starts in the Atlantic (+0.1k to 10.8k units), while they surged in Quebec (+14.7k to 45.2k units). Notably, Quebec's gain almost fully offset Ontario's decline.

Key Implications

• Starts continue to run at a healthy clip that's roughly 20% above pre-pandemic norms, highlighting the resilience of homebuilding in the face of higher interest rates and labour shortages. Past gains in demand are driving homebuilding, with support coming from elevated prices and low levels of unsold inventories. 
• Moving forward, we think that starts will trend lower towards the end of this year and into 2024, as last year's weakness in home sales filters through to residential construction activity. That said, the federal government and several provinces' decision to drop the GST/HST on purpose-built rental construction could lift activity going forward.           

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