Housing starts in Ottawa-Gatineau were virtually unchanged in September compared with a year earlier, marking a shift from a frenetic summer that saw a major year-over-year spike in activity as homebuilders scrambled to meet pent-up demand for new inventory.
Builders started work on 1,540 new homes last month, up just slightly from the 1,531 housing starts posted in September 2019, according to the Canada Mortgage and Housing Corp. While starts in Ottawa fell 13 per cent year-over-year to just over 1,100, new builds in Gatineau jumped to 425 from 242.
Multi-unit dwellings such as condos and apartments made up the bulk of new construction in September, accounting for 1,170 starts. Meanwhile, builders broke ground on 370 single-detached homes.
CMHC’s latest numbers come just days after the Ottawa Real Estate Board reported another surge in transactions last month.
OREB members sold 2,329 properties in September – a whopping 51 per cent increase from a year ago and well above the five-year average of 1,602 – while the average home price in the city rose nearly 30 per cent year-over-year to $622,000.
On the other side of the coin, 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 – dropped significantly in September. CMHC said the seasonally adjusted annual rate of new builds in Ottawa-Gatineau fell from 20,615 in August to 17,259 last month, a 16 per cent decline.
Nationwide, homebuilding activity remained historically strong last month even though the annual pace of starts plunged 20 per cent from August, economists said Thursday.
CMHC said the seasonally adjusted annual rate of housing starts was 208,980 units in September, down from 261,547 units in August but in line with average readings in 2019.
Economists had expected an annual rate of 240,000 starts in September, according to financial markets data firm Refinitiv.
The decrease was driven by weakness in Ontario and British Columbia and lower starts in condos.
However, the six-month moving average of the monthly seasonally adjusted annual rates of housing starts rose slightly to 214,647 in September, up from 212,609 in August.
“The national trend in housing starts was largely unchanged in September,” said Bob Dugan, CMHC's chief economist.
COVID-19 has resulted in volatility in multi-family starts, especially in Toronto, he added.
“We expect national starts to trend lower by the end of 2020 as a result of the negative impact of COVID-19 on economic and housing indicators,” Dugan said in a news release.
Broader demand trends remain resilient in the near term with the level of starts remaining strong by historical standards, said RBC economist Claire Fan.
“Average starts from January to September were one per cent above the same period in 2019 – despite COVID-19 containment measures that shut down wide swaths of the economy in the spring,” she wrote in a report.
“And in Quebec and Ontario, average starts continued to outpace the national comparable while the others, most notably BC, lagged.”
Fan noted that the issuance of permits has remained strong, “suggesting still-solid momentum for housing starts in the near term.”
Housing starts averaged 237,300 units in the third quarter, up 22.2 per cent from 194,100 units in the second quarter.
“Moving forward, past pre-construction sales gains and low rates should ensure that starts remain elevated through next year,” TD economist Rishi Sondhi wrote.
“Afterwards, some slowing may take place as softer population growth brought upon by the pandemic weighs on housing demand, and ultimately, homebuilding.”
The annual pace of urban starts fell 21.1 per cent in September to 195,909 with starts down in eight of 10 provinces.
Housing starts in Ontario fell by nearly 37,000 units to 78,700, while activity in B.C. fell by 10,900 units to 30,700 units. Homebuilding activity in Quebec dropped by 7,500 to 48,000 units.
Alberta drove higher starts in the Prairie region, where urban starts climbed by 5,700 to 24,800 units, offsetting losses in Saskatchewan and Manitoba.
Starts in Atlantic Canada slipped, with declines in every province but Nova Scotia.
The pace of urban starts of apartments, condos and other types of multiple-unit housing projects decreased 27 per cent to 146,005 units, while single-detached urban starts increased 3.4 per cent to 49,904.
Rural starts were estimated at a seasonally adjusted annual rate of 13,071 units.
– With files from the Canadian Press