Housing starts down in August, CMHC reports
Many condos still being built in Toronto, but market volatility will continue, analysts say
Canadian Press
OTTAWA - Housing starts on an annual rate fell to 213,700 units in August, from 236,500 units in July, Canada Mortgage and Housing Corp. reported.
The drop was attributed to a decline in multiple starts, the agency said.
“After three consecutive months of increases, the volatile multiple starts segment dropped to its lowest level of the year in August,” said Bob Dugan, chief economist at the corporation’s market analysis centre.
“Single-detached starts moved higher from their lacklustre performance in July, but not markedly so.”
On a seasonally adjusted annual rate, urban starts declined 11.3% to 179,300 units in August, compared to July.
Urban multiples decreased 22.2% to 87,800 units in August, while singles were up 2.6% to 91,500 units.
Urban starts fell in four out of five regions in August compared to July. Starts fell 21.3% in British Columbia, 19.8% in Ontario, 18% in the Atlantic region and 10% on the Prairies.
In Quebec, urban starts rose 19.6%.
Rural starts in August were estimated at a seasonally adjusted annual rate of 34,400 units.
“Total starts for the first eight months of this year remained ahead of last year’s pace,” Dugan said. “However, strong house price gains will continue to dampen demand for new homes in the latter part of this year.”
Housing starts in the Toronto census metropolitan area dropped by a greater than expected 20% in August to the lowest number since February of this year, according to CMHC.
The seasonally adjusted annual rate of starts was 33,100, down from 41,600 in July. Much of the decline was due to a big drop in the volatile condominium sector.
“We are certainly off the peak, and you can expect some volatility as we trend lower,” said housing analyst Will Dunning.
“We are at a mature stage of this housing cycle,” said Jason Mercer, senior market analyst for the CMHC.
“New construction has remained above average but will decline over the next two years.”
CMHC is forecasting that starts will be 40,000 this year, down from 41,596 in 2005 and from the peak in 2003 of 45,475.
CMHC considers a home started once the concrete foundation is poured.
Analysts warn that the monthly figures can be volatile because one large project can make a big difference to the monthly figures.
With so many condominiums being built in the Toronto area, the numbers have been up and down all year, making it especially difficult for economists to detect a consistent trend.
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