The Canadian home building rebound only gained momentum in July with housing starts rising to an annualized rate of 245,600 units, the highest level recorded in two-and-a-half years.
This result, released today, exceeded expert predictions by a wide margin, as single-family home construction surged across the country while Toronto and Vancouver saw a strong uptick in condo building.
In a research note published earlier today, BMO Economist Priscilla Thiagamoorthy said builders are unlikely to be “packing away those hammers anytime soon” as low interest rates and strong demand will ensure home construction remains robust for the rest of the year.
Looking further ahead, Thiagamoorthy said that home building activity will hinge on the strength of population growth, which is currently taking a hit due to pandemic-induced national immigration restrictions.
The jury is still out on the pandemic’s long-term effects on population growth and, by extension, home building. But, most market observers agree that new home construction has stayed remarkably resilient throughout the volatile year.
RBC Economist Claire Fan noted that national housing starts in 2020 thus far have put up numbers comparable to levels seen through the previous year, even as building activity was curtailed by pandemic measures introduced during spring’s first half. July’s strong performance, which saw housing starts rise 11 percent over the same time last year, was a major contributor in making up for activity lost during the spring.
While the industry is unlikely to be totally impervious to the pandemic’s ill-effects, TD Economist Omar Abdelrahman said the impact on home building so far has been relatively slight.
“[A]side from the complete pause in Quebec in April due to restrictions on non-essential economic activity, homebuilding has shown only a muted response to COVID-19, swiftly returning to pre-pandemic levels. This stands in contrast with more severe declines and more drawn-out recoveries seen in other industries,” he wrote.
