Despite the fact that residential construction remains firmly under the thumb of higher interest rates, the annual pace of Canadian housing starts shot up unexpectedly by 16% in June, according to Canada Mortgage and Housing Corporation.
CMHC said on Friday that there were 279,509 starts recorded in July, up from 241,643 units observed in June. June also saw a 9% loss year over year.
Meanwhile, July's increase marks the highest year-over-year metric has been so far this year. The 14% increase recorded between January and February was previously the one to beat.
The data shows that July’s increase was largely due to starts observed in multi-unit construction, which rose 17% annually in the month with 261,134 units. Speaking to multi-unit starts across urban centres — characterized as those with populations of at least 10,000 — starts surged 21% to 217,306 units. Single-detached urban starts were up by just 2% to 43,828 units.
In an analysis of Friday’s data, Desjardins Economist Kari Norman called the number of multi-unit starts recorded in the month “stronger than expected.”
“However, many of the projects breaking ground last month were financed prior to the recent monetary tightening cycle, which has helped to keep housing starts aloft,” Norman said, adding that “the gradual unwinding” of interest rates, coupled with government efforts to boost purpose-built rental construction, should lend some support to housing starts in the near-term.
“However, this optimism is tempered by challenges such as construction labour shortages, inflation in building materials costs and weaker homebuilder sentiment,” she warned.
Circling back to Friday’s data, CMHC reported that, year to date, there have been 132,823 starts recorded in major urban centres, and that figure is up 7.5% over the same period in 2023.
Also on year-to-date bases, Toronto saw starts come down 9.5% compared to 2023, the government agency said, while Vancouver’s starts slid 18% after seeing a “record year for new home construction” in 2023. On the contrary, starts were up 47% in Montreal, “showing some recovery from a historically low year for new home construction in 2023.”
