Canadian housing starts, also referred to as new home construction, increased by 14% in September compared to the previous month, surpassing expectations, according to data released by the Canada Mortgage and Housing Corporation (CMHC) on Thursday. The seasonally adjusted annualized rate of housing starts reached 279,234 units, up from the revised August figure of 244,543 units. Economists had anticipated a rise to 255,000 units.
Tania Bourassa-Ochoa, CMHC’s deputy chief economist, highlighted that the six-month trend in housing starts saw a notable uptick in September, particularly driven by substantial monthly increases in Ontario, Quebec, and the Prairie provinces. Montreal and Toronto accounted for over 25% of the total monthly starts nationwide, largely due to a surge in new rental apartment construction.
Bourassa-Ochoa emphasized that while the results indicate some resilience, it is essential to recognize that current housing start levels reflect decisions made months or even years ago when investor confidence was higher than it is presently. The annual pace of housing starts in Canadian cities with populations exceeding 10,000 rose to 254,345 in September, marking a 16% increase from August’s 219,408. Rural starts were estimated at 24,889 annually.
Robert Kavcic, a senior economist at BMO, noted in a client memo that September’s new builds exhibited ongoing resilience despite challenging resale conditions. Housing starts have averaged 256,000 over the last 12 months, showing an increase from earlier lows this year. However, Ontario’s average starts over the same period were 63,000, the lowest in a decade, indicating a downturn in that region.
Kavcic further highlighted that rental properties are the main driver of housing starts, surpassing both homeownership and condo construction activities combined.