Pace of construction still below 2014 levels: CMHC
A slight jump in single-detached and multi-family construction in Calgary last month fueled a month-over-month increase in housing starts, according to Canada Mortgage and Housing Corp. (CMHC).
Housing starts in the city were trending at 13,780 units in October compared to 13,050 in September. The trend is a six month moving average of the monthly seasonally adjusted annual rates (SAAR) of total housing starts.
“Housing starts trended higher in October as both single-detached and multi-family construction rose from the previous month,” said Richard Cho, CMHC’s principal of market analysis for Calgary. “Despite the increase from a month earlier, the pace of construction through most of this year has been below 2014 levels due to a rise in supply and a slowdown in migration and employment growth.”
CMHC uses the trend measure as a complement to the monthly SAAR of housing starts to account for considerable swings in monthly estimates and obtain a more complete picture of the state of the housing market.
The standalone monthly SAAR was 13,200 units in October, down from 15,538 in September as the decline in multi-family construction outpaced the increase in single-detached starts on an annualized basis.
Actual housing starts totaled 10,909 in the first 10 months of the year, down 28 per cent from the same period in 2014.
In Alberta, housing starts were trending at 31,770 units, one of its lowest levels in two years, according to CMHC.
Yet ATB Financial chief economist Todd Hirsch noted starts over the past 12 months have averaged 38,000, only slightly below the average over the previous period of 41,000
“The fact that housing starts have pulled back only moderately this year reflects the fact that the market was in a healthy balance before oil prices started to drop,” he said. “Prior to previous recessions — such as 2008 and 2009 — homebuilders had put far too many new homes onto the market. When the downturn hit, there was a surplus of unsold homes on the market, so construction pulled back more severely.
“There’s still a good chance housing starts may slow a bit more toward the end of the year and into 2016. But having gone into the downturn without having built up too much inventory of new homes helped create a good balance. So even if housing starts continue to moderate, they’re unlikely to collapse.