Housing starts rise in December, CMHC says

Housing starts new

Ottawa-Gatineau builders had a busy December, starting work on more than 1,000 new homes as they tried to keep pace with the unrelenting demand for housing in the capital.

Developers launched 1,074 new builds last month, according to the Canada Mortgage and Housing Corp., up from 854 starts recorded a year earlier.  

Multi-unit projects continue to account for the lion’s share of housing starts in the region. Builders started more than 800 new condo and apartment units last month, up nearly 40 per cent from December 2019, as continued demand for rental housing fuelled new construction projects. Meanwhile, the number of single-detached starts held steady at about 260.

Meanwhile, the region’s annual pace of housing starts – which can fluctuate dramatically from month to month due to the volatile nature of multi-unit starts – plummeted last month, mirroring the national trend.

CMHC said the seasonally adjusted annual rate of new builds in Ottawa-Gatineau fell from 17,500 in November to 12,794 last month, a 27 per cent drop. 

Decline 'unsurprising'

Across the country, the annual pace of housing starts in December also decreased compared with November, CMHC said.

The monthly seasonally adjusted annual rate of housing starts for all areas in Canada, excluding Kelowna, B.C., fell 12.2 per cent in December from November, the agency said on Monday.

“December's decline is unsurprising as some pullback from November's massive level was to be expected,” wrote Rishi Sondhi, economist at TD Economics, in a note to clients on Monday.

“Still, homebuilding ended last year on solid footing, buoyed by gains in past home sales and population growth, a declining inventory of unsold new homes, as well as low interest rates.”

Despite the drop in December, CMHC says the six-month moving average of the monthly seasonally adjusted annual rates of housing starts climbed to 239,052 units for the final month of 2020, up from 236,334 in November.

Bob Dugan, CMHC's chief economist, said that the pace of housing starts in 2020 surpassed 2019 in total, despite “pandemic-induced” declines early last year.

“Regionally, the December drop was concentrated in Ontario and Quebec, though both provinces saw the best year since 2004,” wrote Priscilla Thiagamoorthy, economist at BMO Capital Markets Economic Research, in a note to clients.

“That's quite remarkable, especially for Quebec, given the fact that restrictions in the province forced the sector to grind to a halt in April.”

Sondhi of TD Economics wrote that despite a new wave of COVID-19 restrictions in Ontario and Quebec, homebuilders should be “relatively unscathed.”

“Focus now shifts to January, where, in the battle against the pandemic, Ontario's government recently shuttered 'non-essential' construction activities,” Sondhi's note to clients said.

“Notably, condo projects are allowed to continue, as can other residential projects for which a permit has been granted.”

– With additional reporting from the Canadian Press