Home construction across British Columbia slowed down for the second straight month in October, with builder activity resembling 2020’s low point in April.
The Canada Mortgage and Housing Corporation (CMHC) said last week that there were 28,313 annualized housing starts in October, nearly eight percent lower than September’s total.
Housing starts measure how many homes began construction during a given period and are viewed as a key factor in determining market health.
In a research note, Central 1 Credit Union Deputy Chief Economist Bryan Yu wrote that October’s weakness means home construction in the province is on track for a 20 percent decline in 2020.
A significant drop in multi-family starts — the technical term that primarily covers condos — were to blame for the sharp overall decline seen last month, Yu wrote. The weakness in the multi-family segment offset a small increase recorded in detached home construction.
From a local perspective, the Vancouver region saw the largest decline in housing starts last month while Victoria and Abbotsford-Mission saw increases.
The weak October showing means that home construction remains considerably lower than activity recorded in 2019. Yu pointed out that the cool down in housing starts stands in stark contrast to the robust activity seen in the resale housing market.
“While it is natural to associate the drop in starts to the pandemic, this has not been the main driver,” Yu wrote.
“Record housing starts in 2019 has given way to some normalization, however, the slowdown also reflects fewer condo presales in recent years following policy changes to curtail demand. Fewer projects in the pipeline has resulted,” he continued.
There are likely brighter days ahead for BC home construction, with the immigration slowdown and lack of student renters being only temporary factors hurting investor demand for new housing projects, Yu wrote.
The strong resale market is another reason to believe a rise in home construction will be on the horizon after a down year in 2020.
