Canadian Housing Starts (March 2019)

March housing starts rebound from last month's deep freeze

• Canadian housing starts advanced 16% m/m to 192.5k (annualized) units in March. This follows a downwardly revised 166.3k print in February (prior: 173.2k). On a six month moving average basis, starts came in at 202.0k units, almost exactly on par with February.
• Both single-detached and multi-family starts were higher during the month. Urban single-detached starts advanced 10% m/m to 52.9k units while construction of urban multi-family units increased 18% m/m to 139.7k units. 
• Homebuilding was higher in six of ten provinces. Starts jumped 60% m/m to 60.4k units in Quebec – the highest level since 2012. Meanwhile, starts increased but remained relatively low in Ontario (+5.0k to 61.8k units).  Starts were also higher in Manitoba (+0.3k to 6.1k), Saskatchewan (+0.3k to 1.9k), Nova Scotia (+1.3k to 4.9k units) and New Brunswick (+0.1k to 1.3k). On the other hand, starts dropped in BC (-3.4k to 35.4k units) – the second straight decline. Starts also declined for the second straight month in Alberta (-0.3k to 19.9k units). Housing construction was flat in Newfoundland and Labdrador while dropping by 0.3k units PEI.

Key Implications

• As expected, homebuilding shook off February's weather induced chill, with starts bouncing back nicely in March. Still, the prior month's soft print left housing starts at 187.3k annualized units for Q1 overall – the softest showing since 2015. 
• Looking ahead, we expect the pace of homebuilding to pick up slightly in the near-term, buoyed by ultra-strong population growth, low rental vacancy rates in key markets, and past gains in pre-construction sales. Our expectation is consistent with permits, which remain healthy despite the decline in February reported this morning.
• We look for homebuilding to trend lower in 2020, as more recent softness in home sales and an inventory overhang in the Prairies causes it to pull back.

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