According to the latest data from CMHC, the annual rate of housing starts dropped by 11 per cent nationally in March, as higher interest rates hamper affordability and slow the pace of new construction.
The standalone monthly seasonally adjusted annual rate (SAAR) for all housing starts in Canada fell by 11% or 213,865 units, down from 240,927 units in February.
Overall urban starts (metros with a population of 10 000 or more) slid by 12 per cent to 192,545, led by single-detached housing starts, which were down 16 per cent. Multi-unit starts fell by 11 per cent.
Rural starts were approximated at 21,320 units in March.
The trend measure (which reflects a six-month moving average of the monthly SAAR of total housing starts nationally) registered a more modest decline at 6 per cent, which provides cautious optimism that pre-pandemic levels are on the horizon.
“Despite the national decline in March, the SAAR of housing starts and the trend appear to be returning to pre-pandemic levels. With interest rates remaining high, it continues to be challenging for developers and homebuilders to get projects started. We will need to find innovative ways to deliver more housing supply to keep up with demand and ultimately improve affordability,” said Bob Dugan, chief economist at CMHC.
While housing starts continued to be robust in many cities across the country in 2022, the lagging impact of successive interest rate hikes throughout the year is emerging, curtailing consumer demand and creating challenges for developers and builders to remain cost-efficient in the face of higher supply prices.
Among Canada’s largest cities, where the lack of housing supply against demand remains consistent and erodes affordability, only Vancouver had an increase in total SAAR housing starts in March, jumping 98 per cent. This hike is attributed to multi-unit starts, which were twice what they were in February.
Housing starts in Toronto dropped by 26 per cent, while starts in Montreal fell by 12 per cent.
