Ottawa’s housing market showed more signs of having turned a corner in August, as the number of new homes more than doubled when compared to the year before.
The Canada Mortgage and Housing Corp. recorded 777 housing starts for the month, up from 374 when compared to August 2012.
Those figures accounted for increases in the single-detached and multiples segments.
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The six-month moving average of seasonally adjusted annual rates – CMHC’s preferred metric for measuring housing starts – clocked in at 7,534 units. That’s up from 6,477 units for July.
“Seasonally adjusted housing starts firmed once again in August following strong July building activity. Single-detached construction regained somewhat the ground lost since 2012 while row starts revitalized,” said Sandra Perez Torres, CMHC’s senior market analyst for the region, in a statement.
“On the other hand, apartment construction retreated but remained at a healthy level. This resulted in a more even split in construction shares between single, row and apartment construction.”
August’s increase follows a rebound in July, when housing starts increased thanks largely to a jump in the multiples segment.
That followed a lacklustre start to the year, when the number of starts for 2013 was on pace to fall well short of the numbers from 2012.
The totals for the year now stand at 4,474, an increase from 4,459 for the same time period the year before.
Nationally CMHC said the pace of housing starts was down in August compared with the previous month but remained within the forecast range.
The monthly seasonally adjusted rate fell to 180,291 units last month, down from 193,021 in July. The six-month average also dipped to 187,197 units in August from 187,324 in July.
Housing starts in urban areas fell by 5.8 per cent from July’s level, mostly because of fewer multiple-unit projects such as condos or apartments, CMHC reported Tuesday.
“The trend in total housing starts continued to be relatively stable for a sixth consecutive month, remaining within a narrow range of roughly 182,000 to 188,000 units since March 2013. This is in line with our forecasts,” said Mathieu Laberge, CMHC’s deputy chief economist.
However, the decline was bigger than others expected. Estimates compiled by Thomson Reuters had forecast the August seasonally adjusted rate would be 189,500 units.
BMO economist Benjamin Reitzes said Ontario was one of the few bright spots, with starts up 14 per cent. That was offset by declines in the other regions, with the Prairies down 21 per cent, B.C. down 18 per cent, Quebec down nine per cent and Atlantic Canada down seven per cent.
Alberta accounted for the bulk of the drop in the Prairies, leading Mr. Reitzes to suggest efforts to clean up from devastating floods in late July may have diverted resources away from new home construction.
“Canada’s housing market remains in good shape despite the larger-than-expected decline in August housing starts,” Mr. Reitzes said in a commentary.
“Indeed, through the first eight months of 2013 starts are averaging 183.2k, essentially right on demographic demand.”
“Building permits have also remained healthy in recent months, hinting at some near-term upside for starts.”
Mr. Reitzes said that higher mortgage rates will restrain housing sector activity in the second half of 2013, but it seems the industry is headed for a “soft landing” – rather than a major downturn that some observers had predicted.
–With files from The Canadian Press.
