Canadian housing starts surge in March
- Canadian housing starts jumped to 335.2k (seasonally adjusted annualized rate) in March, up 21.6% from 275.6k units in February. Stripping away monthly noise, the 6-month moving average increased to 273.7k units, up from 252.6k units in February.
- The increase in March was driven largely by the multi-starts category, where urban starts increased 33.8% m/m to 222.4k units. Urban single-detached starts increased by 3.6% to 78.6k units.
- The gains in homebuilding were concentrated in Ontario and B.C.:
- Ontario recorded a strong outturn, with starts increasing to 130.7k units (up from 90.1k in February).
- Construction activity in B.C. was robust, increasing to 71.2k units (up from 45.2k units in February).
- Quebec's homebuilding activity moderated to 83.6k units (down from 91.5k units in February).
- The Prairie regions saw mixed readings. Alberta (28.8k units, up from 27.1k in February) and Saskatchewan (6.4k, up from 3.7k in February) both saw starts increase on the month. Manitoba's starts declined to 5.6k units.
- Starts in Atlantic Canada declined to 9k units in March (from 10.1k units in February). Of the Atlantic provinces, only Newfoundland & Labrador saw an increase in activity during the month.
Key Implications
- Canadian homebuilding activity surged, but March's unusually strong reading is unlikely to be sustained. Still, with interest rates low, demand robust, prices elevated, and unsold inventory levels low, the backdrop for housing construction remains solid. The consistently high trend in starts seen since the third quarter of last year corroborates this narrative.
- For the first quarter overall, starts clocked in at a solid 307.7k units, up from 239.7k units in the fourth quarter of last year. This is consistent with our view calling for residential investment to contribute positively to real GDP growth in the first quarter. While uncertainty remains due to the impacts of the third wave of infections, recently announced restrictions in Ontario are not anticipated to impact residential construction.
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