CMHC says Ottawa-Gatineau housing starts surged in June

Housing construction image housing starts

Ottawa-Gatineau’s annual pace of housing starts soared in June, Canada’s housing agency says, part of a nationwide trend that saw the pace of starts post their largest month-over-month increase in a decade to slightly reverse a downward trend seen in recent months.

Canada Mortgage and Housing Corp. says the seasonally adjusted annual rate of housing starts in the National Capital Region totalled 12,085 last month, up from 4,820 in May thanks to a spike in construction of multi-unit projects such as condos and apartments.

The region’s annual rate of multi-unit starts nearly tripled from 3,216 in May to 9,504 in June. The rate of single-detached starts rose 61 per cent to 2,581.

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Canada totalled 281,373 units in June, up from 200,018 in May as there was a surge in activity in the more volatile mutli-unit category.

The rate of multi-unit urban starts rose 59 per cent to 219,914, while the rate of starts for single-detached urban homes increased three per cent to 42,901.

Toronto and Vancouver led the way in construction, making up 47 per cent of total starts, as their actual year-to-date starts were 32 per cent and 49 per cent higher respectively than the same period last year.

Looking at the longer-term trend across the country, represented by the six-month moving average of the seasonally adjusted annual rate, shows 234,974 units in June, up 2.4 per cent from May.

The uptick reverses a steady downward slide that started in November as rising interest rates made it harder to build, but not enough to shake the long-term trend, the agency said.

“Housing starts for the first half of the year were eight per cent lower than they were over the same period in 2022 as the high interest rate environment continues to challenge housing starts through increasing borrowing costs,” said CHMC chief economist Bob Dugan in a statement.

The decline in housing starts from last year comes despite a CMHC projection that Canada needs to significantly ramp up supply to tackle the housing crisis.

It projected in June 2022 that, based on the rate of construction at the time, the country would need to build an additional 3.5 million units of housing by 2030 on top of what was already expected to restore affordability.

TD economist Marc Ercolao said that while the June jump was impressive, the six-month moving average continued to fall slightly.

“One month is not enough to turn around the long-running downward trend in the sector,” he said in a note.

Slowing home sales continued to feed into falling construction activity, which, despite a second-quarter pop, are expected to trend lower going forward, said Ercolao.

“This burst should be short-lived and, as high interest rates continue to work through the economy, homebuilding will be a drag on residential investment in the coming quarters.”

Overall housing starts in Ottawa-Gatineau totalled 1,028 in June, up 15 per cent year-over-year.

While the region’s annual pace of starts declined in May, that drop came after three consecutive months of gains.

– With additional reporting from the Canadian Press

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