Canadian Housing Starts (August 2024)

Housing starts tumble in August

• Canadian housing starts came in at 217.3k annualized units in August, representing a 22% month-on-month (m/m) plunge from July's level. Meanwhile, the six-month moving average of starts dropped 2.9% m/m to 248.5k units.
• August's decline was concentrated in the multi-family sector, with urban starts plummeting 29% m/m to 154.3k units. Meanwhile, urban single-detached starts rose by 3% to 45.2k units.
• On a regional basis, August's decline was broad-based, with urban starts down in 7 of 10 provinces.
  
  • In their weakest showing this year, urban starts declined by 46.3k to (57.1k units) in Ontario. In B.C., they were down 14.3k to 31.5k units, while in Quebec, they climbed by 6.3k to 41.4k units.
  • Starts edged higher in the Atlantic by 0.7k to 13.1k units, supported by an increase in New Brunswick. In the Prairies, starts were down by 8.0k to 56.4k units and fell in Manitoba, Saskatchewan, and Alberta.

Key Implications

• That starts pulled back in August after July's hefty gain was not surprising. However, the extent of the decline was a surprise, and this is the first time that urban starts have dropped under 200k annualized units this year. That said, the prospect of some bounce back in September should leave starts above their Q2 average in Q3, pointing to some positive contribution to residential investment and overall economic growth. 
• Starts have generally maintained a relatively firm pace this year, although we're less optimistic on their performance in 2025. Indeed, next year we expect them to glide lower, given weak pre-sale activity in recent years, slowing population growth and elevated construction costs. August's steep drop certainly fits with this view.           

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