Canadian homebuilding activity took a step down in September from peak levels seen through the summer.
Housing starts across the country recorded an annualized rate of 209,000 units last month, down from August’s 261,500 units and July’s 245,800 units. Despite the slowdown, TD Economist Rishi Sondhi described September’s figure as “still solid” and forecasted elevated homebuilding activity through 2021.
Housing starts measure how many homes began construction during a given period and are generally viewed as a key factor in determining market health.
In commentary published today, Sondhi noted that the decline was concentrated in the multi-unit starts segment, with urban housing starts declining 27 percent from August. Single-detached units in urban areas actually logged an increase of 3.4 percent over the previous month.
The homebuilding decline was spread throughout the country, with Ontario, Quebec, British Columbia, Manitoba and Saskatchewan all seeing decreases compared to the August highs. Alberta and Nova Scotia were the lone provinces where homebuilding increased over the previous month.
While September wasn’t a headline-grabbing month like July and August, Sondhi was upbeat in his commentary.
“Despite the decline from August’s ultra-strong pace, September marked yet another month of healthy homebuilding activity in Canada. Moving forward, past pre-construction sales gains and low rates should ensure that starts remain elevated through next year,” Sondhi wrote.
But beyond 2021, the economist sees some challenges presented by the pandemic’s impact on Canada’s immigration system.
“Afterwards, some slowing may take place as softer population growth brought upon by the pandemic weighs on housing demand, and ultimately, homebuilding,” he wrote.
BMO Senior Economist Robert Kavcic appeared more skeptical of the sustainability of the current pace of home construction. Despite the fact that home construction in 2020 may end up slightly exceeding figures achieved in the previous year, Kavcic pointed out that the “softer condo market” could put downward pressure on activity going forward.
At the same time, the economist said “there’s no doubt” that the market for suburban and small town single-detached homes remains “piping hot.”
