Overbuilding

Housing starts continued upward trend in July

Wednesday, August 26, 2015

Canadian housing starts reached a trend measure of 185,586 units in July, compared to 184,035 in June, reports the Canada Mortgage and Housing Corporation (CMHC). The trend represents a six-month moving average of the monthly seasonally-adjusted annual rates (SAAR) of housing starts.

“Housing starts in Canada have been trending higher over the past three months, with gains in multiple starts offsetting declines in single starts,” said Bob Dugan, chief economist at CMHC, in a press release. “The decline in single starts is in line with CMHC’s expectations of buyers shifting demand away from higher priced new single-detached homes towards lower-priced alternatives. Gains in multiple starts are largely due to higher rental apartment starts, a substantial portion of which are seniors’ residences.”

CMHC uses the trend measure along with the monthly SAAR of housing starts to account for considerable swings in monthly estimates and to get a better sense of the state of Canada’s housing market. Sometimes, analyzing only SAAR data can be misleading as it largely relates to the multi-unit segment of the market, which varies on a monthly basis.

The standalone monthly SAAR fell to 193,032 units in July, down from 202,338 in June. The SAAR of urban starts fell 5.9 per cent to 176,998 units in July, as multi-unit urban starts fell 8.2 per cent to 119,478 units. Single-detached urban starts stayed more steady, only decreasing 0.8 per cent to 57,520 units.

In July, the seasonally adjusted annual rate of urban starts fell in Ontario, Quebec and the Prairie and Atlantic provinces. It did, however, increase in British Columbia. Rural starts were estimated at a seasonally adjusted annual rate of 16,034.

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