Canadian Housing Starts (April 2022)

Rishi Sondhi, Economist | 416-983-8806

Date Published: May 16, 2022

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Canadian housing starts post solid increase in April

    • Canadian housing starts came in at a robust 267.3k annualized units in April, marking an 8% m/m increase from March. The six-month moving average remained exceptionally strong at 257.9k units.
    • April's increase in urban starts was driven by the multi-family category, which jumped 14% m/m to 178.1k units. Meanwhile, single-detached starts increased by 1% m/m to 67.2k units.
    • Regionally, April's gain was narrowly-based, as starts were up in only 4 of 10 Provinces: 
      • In the Prairies, starts climbed by 11.9k to 51.9k units. Steep gains were recorded in Saskatchewan and Alberta, with the former hitting its highest level since September 2021 (6.4k units), and the latter tallying its loftiest total (39.0k) units since November of last year.
      • Starts increased by 20.3k to 49.3k units in B.C, which accounted for the largest share of Canada's gain.
      • In the Atlantic Region, starts tumbled by 2.8k to 7.9k units, weighed down by New Brunswick, Newfoundland and Labrador and PEI. There was a small gain in Nova Scotia, however.   
      • Starts dipped by 1.4k to 57.4k units in Quebec, and fell by 5.7k to 78.9k units in Ontario. 

    Key Implications

    • Like clockwork, homebuilders continue to break ground at a solid pace. This reflects an elevated price backdrop, lean inventories in the new home market, and past sales gains. And, lofty permit issuance points to this rate being sustained in the near-term. The only nit to pick here is that April's gain was not broad-based across provinces.
    • Looking past the very near term, starts should gradually decline, reflecting higher interest rates that weigh heavily on demand and increase builders' financing costs. Note that starts have already trended lower from the multi-decade high observed early last year. 
    • Homebuilding could receive a boost from policies introduced in the federal budget, which would (with a lag) put some downward pressure on home prices. However, the federal government's stated intention of doubling the current pace of homebuilding over the next decade looks like a stretch, as it would imply a run of never-before-seen construction levels.