Canada is seeing new housing starts begin to fizzle, with November’s growth largely flat. It might present a concern for many, but BMO Capital Markets explained it shouldn’t. In the bank’s latest research note, they argue new housing starts are still very high. A record number of new homes are under construction, and a lot of inventory is about to arrive.
Canadian Housings Starts Remain, But Off Record-Level
Canadian real estate development of new housing has slowed just slightly. Seasonally adjusted annual rate (SAAR) of new housing starts fell 0.2% from October to 264,000 homes. The CMHC-preferred six-month “trend” came in at 274,400 units, down 1 point from last year.
It might seem slow when we’re used to seeing huge growth every month, but starts are still high. They’re off the record high, but still very much above pre-2020-levels. Weak demand for new homes will throttle the numbers to more conservative levels soon.
“We’ll see what 2023 offers, but with demand crumbling, don’t be surprised to see starts pull back,” said Robert Kavcic, a senior economist at BMO.
Adding, “Not to worry, with last year’s 271k tally, we’re on pace for the biggest two-year wave of housing starts on record, even topping the mid-1970s building boom.”
Canada Has Never Seen More Homes Under Construction
During the 70s, Canada experienced one of the most robust building booms in its history. The rate of annual population growth was roughly double today’s current boom. Canada is about to see a lot more housing, with a lot of it currently under construction.
“…on a per-capita basis, we’re going into 2023 with more housing under construction than ever before,” said Kavcic.
BMO shared a chart with institutions showing just how much construction is happening. Nearly 10 homes for every 1,000 people in the country are already being built. It’s fairly close to the annual growth, and with more than one person in a home—it’ll satisfy a lot of demand.
“Now, try to double this…,” he quipped.