September housing starts in Calgary region dip slightly

Housing starts in the Calgary region dipped slightly in September compared with a year ago, according to a new report released Monday by Canada Mortgage and Housing Corporation.

The federal agency said total starts in the Calgary census metropolitan area of 1,026 were down one per cent from a year ago.

However, the number of single-detached starts rose by 56 per cent to 484. All other starts, including condos, fell by 25 per cent year-over-year to 542 units.

Nationally, the CMHC said the trend in housing starts was 271,068 units in September, down from 284,757 units in August. The federal agency said this trend measure is a six-month moving average of the monthly seasonally adjusted annual rates (SAAR) of housing starts.

“The six-month trend in housing starts declined from August to September, with total starts continuing to pull back from their earlier 2021 levels,” said Bob Dugan, CMHC’s chief economist. “Single-detached and multi-family SAAR starts were both lower in Canada’s urban areas in September, which led to a decline in overall SAAR starts for the month. 

Bob Dugan, CMHC’s Chief Economist (CNW Group/Canada Mortgage and Housing Corporation)

“On a trend and monthly SAAR basis, however, the level of housing starts activity in Canada remains high in historical terms. Among Vancouver, Toronto and Montreal, Vancouver was the only market not to register growth in total SAAR starts in September, due to a decline in the multi-family segment.”

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 federal agency said the standalone monthly SAAR of housing starts for all areas in Canada was 251,151 units in September, a decrease of 4.4 per cent from 262,754 units in August. The SAAR of urban starts decreased by 4.5 per cent in September to 223,055 units. Multiple urban starts decreased by four per cent to 165,861 units in September, while single-detached urban starts decreased by 5.9 per cent to 57,194 units.

Rural starts were estimated at a seasonally adjusted annual rate of 28,096 units, it said.

Royce Mendes, an economist with CIBC Economics, said housing starts took another step lower in September from the highs reached earlier in 2021.
“The pace of 251K was roughly in line with expectations and almost exactly matched our own forecast. While that’s well off the peaks seen earlier this year, it’s still stronger than the pre-Covid trend of just above 200K. The deceleration from 260K in the prior month was equally due to slower building in single-detached homes and multi-units. Demand for housing in Canada remains strong, but permits have been slowing lately, potentially due to supply constraints for both labour and materials. Now that interest rates have begun to climb again, we expect there’s scope for further deceleration in the months to come,” he said.
Rishi Sondhi, Economist with TD Economics, said the pace of housing starts continues to inch lower from the near-record highs observed earlier in the year.
“For the third quarter overall, starts were down 6.1 per cent, with moderating permit issuance signalling some further near-term cooling ahead. As home sales also fell steeply, a third quarter contraction in residential investment is looking very likely, and it’s worth noting that the construction industry appears to be grappling with labour shortages,” he said.

“Still, the robust demand and record price growth unlocked during the pandemic has triggered healthy homebuilding activity (for context, the six-month trend in starts was 210k heading into the outbreak, compared to 271k now). And, with housing demand now turning around after a brief correction, prices still rising at a rapid rate, and population growth likely to pick up, homebuilding should remain well supported. ”

Shelly Kaushik, Economist with BMO Economics, said Canada’s housing market continues to be a key driver in the recovery.

“While the momentum of new home construction has moderated since earlier this year, starts remain at historically elevated levels and homebuilding is well supported amid still-robust demand,” she said.

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