National housing starts outpace forecasts

Canada's new homes market is showing strength, based on the latest data from May, with multi-family development leading the way.

Home starts data from last month outpaced analysts' expectations with an annualized figure of 287,000 units, exceeding forecasts of a slight slowdown to 255,000 units, a recent report from CIBC Economics stated.

May's rise in starts was driven by multi-family builds, rising by 13 per cent from the previous month. All told, multi-family starts accounted in May for about 201,000 starts per annualized rate, as noted in a separate report from TD Economics.

By comparison, single-family detached starts made up about 63,000 starts on an annualized basis, gaining four per cent in May on a month-over-month basis.

Five out of 10 provinces saw starts rise, with Ontario making up the most significant share of new starts at nearly 89,000 units, up by about 11,000 starts. The Prairies region also had strong growth, increasing by 3,700 units in May from April to about 56,000 starts on an annualized basis, led by Alberta, the TD report stated. The report noted that despite cooling resales and prices in many parts of the country, builders continue to add supply “at a very healthy clip” due in part to the lag between development and quick-shifting residential market conditions.

Strong activity, it added, should continue for the rest of the year based on elevated permitting data. Yet starts are forecast to trend lower next year due to higher financing costs, including mortgages, that will weigh on Canadian homebuilders.