Multi-family housing starts in Calgary region pick up in activity

The pace of housing starts in the Calgary region grew in March compared to a year ago thanks to the strength of the multi-family sector.

A report released Monday by Canada Mortgage and Housing Corporation indicated overall starts in March for the Calgary census metropolitan area of 1,058 were up 12 per cent from a year ago.

The ‘all other’ category, which includes condos, rose by 27 per cent to 721 units.

But in the Calgary region the single-detached market saw a decline of 10 per cent year over year to 337 housing starts.

Nationally, the trend in housing starts was 273,664 units in March, up from 252,636 units in February. This trend measure is a six-month moving average of the monthly seasonally adjusted annual rates (SAAR) of housing starts, said the CMHC.

“The national trend in housing starts increased in March, reflecting very elevated levels of activity in January and March 2021,” said Bob Dugan, CMHC’s chief economist. “Multi-family SAAR starts rebounded strongly following a decline in February, with Toronto and Vancouver registering particularly large gains in this segment. Single-detached SAAR starts also contributed to the increase in the overall trend in March, but by a relatively modest amount in comparison to Multi-family starts.”

CMHC said it uses the trend measure as a complement to the monthly SAAR of housing starts to account for considerable swings in monthly estimates and obtain a more complete picture of Canada’s housing market. 

The standalone monthly SAAR of housing starts for all areas in Canada was 335,200 units in March, an increase of 21.6 per cent from 275,567 units in February. The SAAR of urban starts increased by 24.4 per cent in March to 300,973 units. Multiple urban starts increased by 33.8 per cent to 222,358 units in March while single-detached urban starts increased by 3.6 per cent to 78,615 units. Rural starts were estimated at a seasonally adjusted annual rate of 34,227 units.

“Canadian homebuilders broke ground at a record-breaking clip in March. The pace of housing starts of 335K was well ahead of expectations for starts to clock in at 255K, and represented the highest reading on record of any month since the data series began in the 1970s,” said Royce Mendes, an economist with CIBC Economics.

“The gains were particularly focused in the multi-unit segment of the market, which rose 32 per cent in March. However, single-detached starts also inched ahead with a gain of three per cent during the month. BC and Ontario led the way higher, with starts rising 62 per cent and 50 per cent, respectively in each province. The big acceleration came as weather was unseasonably warm in many parts of the country. The pace of of starts was also revised higher for February to 276K, from 246K previously. Although we see building activity cooling off somewhat from the torrid pace of the past few quarters, new home construction is still expected to be a major contributor to overall GDP growth this year. That’s welcome news for a country that is in dire need of more housing supply, as clearly evidenced by the recent run up in home prices.”

Shelly Kaushik, Economist with BMO Economics, said red-hot demand for real estate propelled a record month for housing starts in March.

“While the market will need a long stretch of supply growth to have a meaningful effect on prices, the March numbers are a solid start,” said Kaushik.

“The increase should help drive supply—we saw last week that new listings of existing homes hit a record high in March, but were still outpaced by sky-high demand. Demand for detached homes in smaller cities has been supported by record-low interest rates and a preference for more space during the pandemic. Still, the country’s largest cities are poised to lead the recovery as restrictions eventually ease.”

Omar Abdelrahman, Economist with TD Economics, said March’s unusually strong reading is unlikely to be sustained.

“Still, with interest rates low, demand robust, prices elevated, and unsold inventory levels low, the backdrop for housing construction remains solid. The consistently high trend in starts seen since the third quarter of last year corroborates this narrative,” he said.

“For the first quarter overall, starts clocked in at a solid 307.7k units, up from 239.7k units in the fourth quarter of last year. This is consistent with our view calling for residential investment to contribute positively to real GDP growth in the first quarter. While uncertainty remains due to the impacts of the third wave of infections, recently announced restrictions in Ontario are not anticipated to impact residential construction.”

 

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