As the pandemic sent home buyers flocking to suburban areas across Canada, home builders responded by boosting construction of detached homes.
This detached home building surge sent the average number of housing starts recorded in 2020 to a three-year high at the national level, according to new analysis from BMO Economist Priscilla Thiagamoorthy.
Data on housing starts, released monthly by the Canada Mortgage and Housing Corporation (CMHC), measures how many homes began construction during a given period and are viewed as a key factor in determining market health.
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For the previous two years, housing starts in the single-family home property type had been declining, Thiagamoorthy wrote. That trend reversed last year, when all-time low mortgage rates and the unprecedented shift to widespread remote work set house hunters’ sights on larger homes en masse.
Although Canadian home construction slowed down in December, measuring 228,279 annualized units in the final month of the year, the six-month moving average for housing starts continued riding high. From June to December, housing starts averaged 239,052 annualized units, a 13-year high, according to Thiagamoorthy.
“In spite of the pandemic-related plunge in the spring, housing has turned out to be one of the strongest sectors in 2020,” she wrote.
However, there’s reason to believe that the momentum that accelerated home construction activity in 2020 will wane in 2021.
“While home construction has helped propel the recovery, we expect activity to moderate slightly in the year ahead amid slower population growth and still-soft labour market conditions,” Thiagamoorthy wrote.