CMHC reports further slowing of housing starts with no turnaround in sight

The pace of homebuilding in Canada continues to slow with no near-term signs of a turnaround, said Canada Mortgage and Housing Corp. on Feb. 16.

The national housing agency said the seasonally-adjusted annual pace of housing starts declined 15 per cent in January.

Housing starts can vary considerably month-to-month as big projects get started, but the agency’s six-month moving average for annual starts also showed a 3.5 per cent decline.

“The six-month trend has decreased for the fourth consecutive month,” said CMHC deputy chief economist Tania Bourassa-Ochoa in a news release.

“We expect new construction to continue trending lower going forward as trade and geopolitical uncertainty, high construction costs, weaker demand, and rising inventories continue to constrain developer activity.”

She said a near-term turnaround is looking unlikely, and reflects what the agency has been hearing from developers over recent months.

The pullback comes amid a variety of pressures, including lower immigration numbers and economic uncertainty over changing U.S. trade policy.

January’s seasonally adjusted annual rate worked out to 238,049 units, compared with 280,668 units in December. It says the January drop more than offset the increase observed in December.

Actual housing starts were up one per cent year-over-year in centres with a population of 10,000 or greater. Some 16,088 unit starts in those centres were recorded in January, compared with 15,957 a year ago.

The six-month moving average of the seasonally adjusted annual rate of housing starts was 254,794 units for January.

Prime Minister Mark Carney campaigned on a promise to double housing construction to 500,000 homes a year over a decade. TD said in a report that the previous high was 260,000 in the mid-1970s.

Last September, the federal government launched a new agency called Build Canada Homes with an aim to accelerating construction. It said it will provide an initial $13 billion to the agency for it to enable financing, provide land and help builders get projects off the ground.