BC home construction was firing on all cylinders as 2020 drew to a close and the new year is expected to bring with it a further acceleration in the pace of building.
New figures published by the Canada Mortgage and Housing Corporation (CMHC) showed urban housing starts hit an annual rate of 39,688 units in December, down from the previous month but still the second-highest monthly rate for 2020. Meantime, housing starts in rural areas rose 65 percent to an annual rate of 2,849 units.
Data on housing starts, released monthly by the CMHC, measures how many homes began construction during a given period and are viewed as a key factor in determining market health.
The December data indicates a “solid hand off” that suggests 2021 will see a further five percent rise in home construction, according to Central 1 Credit Union’s Deputy Chief Economist Bryan Yu.
“Strong resale market activity and lack of inventory is triggering building of homes, and likely
to lift pre-sale activity for condominiums. This is likely to move more projects into the construction phase,” wrote Yu in a research note published last week.
He went on to note that a sharp decline in immigration rates and cooling investor demand for condo units through the pandemic will partially offset the impact the strong resale market will have on home construction.
At the national level, home construction hit a three-year high in 2020 as detached home building soared. When looking at just the second half of the year after the worst effects of the first widespread lockdowns had passed, home construction rose to a 13-year high.
According to BMO Economist Priscilla Thiagamoorthy, there’s reason to believe 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 earlier this month.
