Skip to main content

A house under construction in Richmond, B.C., on May 16, 2018.

DARRYL DYCK/The Canadian Press

Canadian housing starts surged in June as groundbreaking on multiple unit urban homes hit a record high, and building permits for May also jumped, reflecting renewed strength in housing after a weak spring, separate reports showed on Tuesday.

Construction starts on homes blew past expectations in June, increasing to 248,138 from May’s downwardly revised 193,902, on strength in multiples – typically condos, the Canada Mortgage and Housing Corp said.

Economists had forecast starts would rise to a seasonally annual adjusted rate of 210,000 homes in June.

Story continues below advertisement

“Looking through the volatility, the average number of starts over the past two months is in line with the pace of activity seen since last summer,” CIBC Capital Markets economist Royce Mendes wrote in a note to clients.

“Looking ahead, though, the weight of tighter lending standards and gradually rising interest rates likely mean that residential building activity is set to cool over the remainder of the year,” he added.

Mortgage stress-tests imposed in January by Canada’s big banks dampened home sales, adding to higher mortgage costs and a series of government measures aimed at cooling the long housing boom in the biggest cities, Toronto and Vancouver.

The Bank of Canada has raised interest rates three times since last July, and another rate hike could come on Wednesday.

But Canada’s condo market has remained robust, in part because buyers have been priced out of more expensive single-family homes.

The CMHC report showed a 46 per cent surge in multiple-unit urban starts, eclipsing a 4 per cent decline in groundbreaking on single homes.

“It is not too surprising to see demand tilted toward the urban multiple category given sustained demand for more affordable housing, especially in an environment of stricter mortgage requirements,” National Bank economist Kyle Dahms wrote in a research note.

Story continues below advertisement

A separate report from Statistics Canada showed the value of Canadian building permits rose 4.7 per cent in May from April as strong intentions to build houses outweighed weakness in the non-residential sector. The gain erased April’s 4.7 per cent decline.

The value of residential permits rose 7.7 per cent in the month, the second-highest level on record. Five provinces posted an increase with Ontario and British Columbia reporting the largest gains.

The value of permits for multi-family dwellings climbed to a record high, while the value of single-family building permits rose for the first time in five months.

Permits for non-residential structures fell 0.7 per cent.

Report an error
Comments

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • All comments will be reviewed by one or more moderators before being posted to the site. This should only take a few moments.
  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed. Commenters who repeatedly violate community guidelines may be suspended, causing them to temporarily lose their ability to engage with comments.

Read our community guidelines here

Discussion loading ...

Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.
Cannabis pro newsletter