Home construction across Canada continued at a blistering pace in April, hitting 268,600 annualized units.
While it’s lower than the all-time of 334,800 annualized housing starts recorded in March, BMO Senior Economist Robert Kavcic wrote this week that home building in April remained at “an extremely strong level” by historical standards.
“In fact, average annualized starts over the past six months are running at the strongest level on record, topping building booms in the 1970s and 1980s,” he wrote.
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.
Single-family and multi-family home building boomed in two distinct periods in the early and late 1970s with a recession, according to Statistics Canada data. Home construction soared again in the late 1980s before the recession of 1990-1991 spoiled the party.
But when looking at the most recent six-month average for housing starts, Kavcic says this current period has these major 20th century booms beat.
When it comes to the months ahead, TD’s Rishi Sondhi writes that the backdrop for builders “remains favourable” despite challenges like the soaring price of lumber and population growth that has yet to fully ramp back up from pandemic lows.
Building permits, he says, are at multi-year highs, meaning builders intend on beginning construction on a high volume of new homes in the near future.
Recent reporting has brought to light just how dire the housing supply situation is in Canada, with a Scotiabank report ranking the country as the most undersupplied in the G7 when it comes to housing.
While the current building boom is a step in the right direction, it’s unlikely to substantially alleviate the supply problems in the long term.
Scotiabank Chief Economist Jean-François Perrault recently called for the creation of a national table involving all levels of government, residential developers and civil society organizations to identify core problems and develop solutions for the country’s supply deficit.
