Canadian new home sales have been a little soft, putting a drag on new home starts. Canada Mortgage and Housing Corporation (CMHC) data shows new housing starts slipped lower in July. The decline shows a little moderation from the all-time peak a few months ago. Even with the decline though, new starts are higher than they were the year before the pandemic.
Canadian Housing Starts Slip From Records, But Still Very High
Canadian new housing starts tapered, but remain significantly above their long-term average. Seasonally adjusted annual rate (SAAR) home starts hit 272,176 in July, down 3% from a year before. Urban starts represented 249,001 of those home starts, down 0.65% from last year. New housing in the city fell less than the average, implying most of the drop is due to a decline in rural housing.
Canadian New Housing Starts
The seasonally adjusted annual rate (SAAR) of new housing starts across Canada.
Source: CMHC; Better Dwelling.
The drop is being played up as a reason to fear a housing crunch, but it’s still very much elevated. The SAAR rate in July was 25% higher than the rate for the year of 2020, and 30% higher than the rate in 2019. This is a huge construction boom, during a period where there’s little population growth.
Toronto New Home Starts Are Over 50% Higher Than They Were In 2019
Nearly a fifth of all urban starts were located in Toronto. SAAR home starts reached 46,356 in July, up 29% from a year before. That makes the past 12 months 20% higher than the full year of 2020, and 52% higher than 2019. A little lower than the peak, but still very high for the region.
Vancouver Is One Of The Few Regions To See A General Slowdown
Vancouver is bucking the trend after soft sales for new housing over the past few years. SAAR home starts hit 24,383 in July, down 46% from the month before. The number for the 12 months ending in July is still 9% higher than 2020 starts. They also happen to be 13% lower than 2019’s full year numbers though. Quite the taper, but that might change with the recent bump in new home sales.
Canadian new home starts made a slight dip from record highs, but remain elevated. It might be lower than the peak, but we’re still seeing higher than pre-pandemic levels of activity. Even with ideal population growth targets, we’re looking at over one new home per 1.2 people. That would be nearly double the forecast need for housing, which should provide a little price relief.
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