Canadian Housing Starts (October 2022)

Canadian housing starts dropped but remained elevated in October.

• Canadian housing starts came in at a healthy 267.1k annualized units in October, marking an 11% month-on-month (m/m) decline from September's robust level. Despite the decline, the six-month moving average remained strong at 277.7k units.
• Urban starts were lower in both the multi-family and single-detached categories. The former declined 13% m/m to 188.2k units, while the latter fell 4% m/m 57.0k units.
• Urban starts were lower in five of 10 Provinces:
  • In Ontario, starts plunged from their extremely elevated September level, but remained firm (-44.4k to 86.5k units). 
  • In the Atlantic Region, starts declined (-3.3k to 5.3k units), with the drop almost entirely accounted for by New Brunswick.   
  • Starts also declined in B.C. (-7.4k to 42.8k units).
  • In contrast, starts increased in Quebec (+9.6k to 49.7k units) and PEI (+0.7k to 0.8k units). Meanwhile, starts jumped in the Prairies (+14.6k to 61.0k units), with gains observed in Manitoba, Saskatchewan and Alberta. 

Key Implications

• Starts continue to run at a healthy level, buoyed by elevated prices and low levels of unsold new home inventories. However, they declined in October, which fits with our view calling for a decline in Q4 residential investment. And, the recent downtrend in permit issuance suggests that more of the same could be in store moving forward. 
• Such an outcome would be consistent with our forecast calling for a moderation in the pace of starts in 2023, as higher interest rates and past declines in demand weigh on homebuilding.           

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