Alberta, along with British Columbia, posted the largest national advances in building permits in January, mainly as a result of higher construction intentions for residential buildings. Led by a 31.6 per cent increase in residential construction permits, the total value of permits issued in Alberta in January was $1.7 billion, a 31.6 per cent increase over December.
Residential building permits in the province jumped from $825 million in December to nearly $1.1 billion in January, a new all-time high.
“Building permits are an excellent way to look into the future of development activity. Judging by fresh statistics this morning, Alberta construction companies have a busy year ahead,” said Todd Hirsch, ATB Financial’s chief economist.
In Calgary, construction workers saw their workloads lessen in January, as month-over-month building permits in the city dropped by 12.5 per cent. The decrease, according to Statistics Canada, was largely due to a decline in commercial and industrial buildings.
However, on a year-over-year basis, permits in the city increased substantially, rising by 48.8 per cent from January 2013. The news was also good nationally, as Statistics Canada reported the value of building permits issued by Canadian municipalities rose 8.5 per cent to $7.0 billion in January.
Along with the record level of permits issued in the province, the latest numbers from Canada Mortgage and Housing Corporation (CMHC) show builders in Calgary were plenty busy in February. Housing starts were trending at 14,993 units in February compared to 14,322 in January, the trend is a six month moving average of the monthly seasonally adjusted annual rates (SAAR) of total housing starts.
“The trend in total housing starts in February increased from the previous month, due to gains in both single-detached and multi-family construction,” said Richard Cho, CMHC’s senior market analyst for Calgary. “Continued growth in employment, strong net migration and declines in new home inventories has supported the rise in new construction.”
The trend measure is used by CMHC as a complement to the monthly SAAR of housing starts in order to account for considerable swings in monthly estimates. This also allows CMHC to gather a more complete picture of the state of the housing market.
Analyzing only the SAAR can be misleading in some situations, as the SAAR is driven by the multiples segment of the market which can be quite variable from one month to the next.
In February, the standalone monthly SAAR was 15,506 units which are down from the 17,505 units in January. Even though there was a decrease, overall housing starts remain elevated and are consistent with our recent forecast that builders will increase production in 2014.
The report explained that today’s market is showing a healthy balance, and new home construction is keeping pace with demand and builders are not in danger of having too much inventory.