Canadian Housing Starts (September 2021)

Rishi Sondhi, Economist | 416-983-8806

Date Published: October 18, 2021

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Canadian housing starts fell but stayed healthy in September

  • Canadian housing starts came in at a very healthy 251.2k annualized units in September, marking a modest 4.4% m/m decline from August's level.
  • In urban markets, both single-detached and multi-family units were lower. The former fell 5.9% m/m to 57.2k units while the latter declined 4% to 165.9k units.
  • Starts were lower in 5 of 10 Provinces:  
    • B.C. was the largest drag on homebuilding in September, with starts plunging by 10.7k to 31.5k units. However, they were also down in Ontario (-8.7k to 91.0k units).
    • In Quebec, urban starts were up by 6.5k to 53.5k units. 
    • Starts also climbed in the Atlantic Provinces (+0.5k to 6.9k units), driven by gains in Nova Scotia and Newfoundland and Labrador.
    • Urban starts were also higher in the Prairies (+2.0k to 40.1k units), as increases in Manitoba and Saskatchewan offset a decline in Alberta.

Key Implications

  • The pace of housing starts continues to inch lower from the near-record highs observed earlier in the year. For the third quarter overall, starts were down 6.1%, with moderating permit issuance signaling some further near-term cooling ahead. As home sales also fell steeply, a third quarter contraction in residential investment is looking very likely, and its worth noting that the construction industry appears to be grappling with labour shortages.  
  • Still, the robust demand and record price growth unlocked during the pandemic has triggered healthy homebuilding activity (for context, the 6-month trend in starts was 210k heading into the outbreak, compared to 271k now). And, with housing demand now turning around after a brief correction, prices still rising at a rapid rate, and population growth likely to pick up, homebuilding should remain well supported.