Canadian housing starts picked up the pace in March, the Canada Mortgage and Housing Corporation reported on Monday. Units jumped from 166,290 in February to 192,527 the following month, a 16 per cent increase month-over-month.
Although this is still below the annual expected average of 196,500, one economist says this is a good sign for the market.
“There’s no doubt the Canadian housing market has slowed in the past year, but the latest data on construction suggests the downward trend is stabilizing,” senior economist Sal Guatieri, of BMO Capital Markets, said.
“We still see starts hovering around, or even just above, 200,000 this year, marking a small step back from last year while remaining historically high.”
The six-month moving average saw the annual rate of housing starts stay relatively the same. In March, starts were at 202,279, up slightly from 202,039 in the previous month.
Starts on all home types rose in March, but condominiums, apartments, and townhouses made up the greatest volume. Multi-family homes saw starts on 135,894 units last month, which is an increase of 18.6 per cent.
Single-detached urban homes also saw an increase of 12.1 per cent with 42,139 units, while rural homes had an estimated 14,494 units at a seasonally adjusted annual rate.
Quebec experienced the most homebuilding in March, jumping 60 per cent month-over-month to 60,400 units. This is the highest on record since 2012, TD Bank reports.
Meanwhile, Ontario experienced a modest increase of 5,000 units. Homebuilding also picked up slightly in Manitoba (+300 units), Saskatchewan (+300 units), Nova Scotia (+1,300 units) and New Brunswick (+100 units), according to TD.
The dip in February housing starts can be attributed to cold weather. While the increase in March is positive, a report from Altus Group predicts new home construction will continue on a downward trend for the next two years. This prediction is based on the fact that housing starts declined five times in the last six months of 2018, before rising in January and falling in February.
“Higher interest rates compared to a year ago will have lingering negative impacts,” the report said. “A moderately slower economy combined with some uncertainty may keep many consumers on the sidelines.”
The Altus Group report predicts housing starts will fall between two to 3.7 per cent over the next two years.