Skip to main content

Economy Housing starts cool in October on sharp condo slowdown

A man jogs through the Millennium Water development which was the athletes' village during the 2010 Winter Olympics in Vancouver.

DARRYL DYCK/THE CANADIAN PRESS

Canada's housing starts were cooled by an unexpected sharp slowdown in construction of new condominiums in October, sending them to their slowest pace in seven months.

Canada Mortgage and Housing Corp. reported that housing starts were at an annualized rate of 183,600 last month, down from 197,400 in September and far below the 200,000 anticipated by economists. Urban "multiples" starts – the condo segment – slumped 15,900, or nearly 14 per cent, to 98,700, their lowest in seven months. It marks only the second time since April, 2013, that urban multiples starts were under 100,000.

Urban single-family dwellings starts inched up 3,500, to 66,000.

Story continues below advertisement

Economists had anticipated more strength in the housing starts, given recent strong building-permits numbers, which typically foreshadow new construction. Residential building permits, by number of dwelling, rose 9.4 per cent in September (the most recent month reported), including a 12.9-per-cent rise in the multiples category. By value, residential building permits have risen more than 20 per cent in the past six months.

Still, economists noted that the overall trend in home construction remains strong. CMHC said the six-month average for starts is 195,700, down only slightly from 197,800 last month.

"Given the healthy building permit applications in September, we may see a rebound for the multi category, although the longer-term outlook isn't all that rosy given the accumulating inventories of unsold condos in some parts of the country. We continue to expect a moderation in residential investment next year," said National Bank of Canada senior economist Krishen Rangasamy in a research note.

Economists also noted what is probably a healthy cooling of a couple of major red-hot urban markets – Vancouver and Calgary. Housing starts slowed by 5,000 or 25.7 per cent in Vancouver, to 14,400, their slowest pace in 20 months. Vancouver's starts have now declined 46 per cent in the past two months, since hitting a peak of 26,600 in August. Starts in Calgary edged down 4 per cent, to 17,600.

By contrast, Toronto's starts jumped by 10,500, or 70 per cent, to 25,600, reflecting a rebound from a sharp decline in September.

"While recent home prices trends are starting to raise some eyebrows, there's little concern about overbuilding in Canada with housing starts trending near fundamental requirements. This is true in the 'hot 3' cities (Vancouver, Calgary and Toronto) as well, where resale price growth is heated, but new construction is largely following population trends," said Bank of Montreal senior economist Robert Kavcic.

"Building trends in these three cities largely mirror different population growth trends since 2012 – relatively stable in Vancouver, accelerating in Calgary and cooling in Toronto," he wrote in a report.

Story continues below advertisement

These three cities have been of keen interest to market watchers, as they have been the key drivers of Canada's continued strong housing market. Their strength has been getting particular attention of late from the Bank of Canada, which remains concerned about an overstretched housing market and household debt levels. Bank of Canada Governor Stephen Poloz recently noted that aside from these three hot markets, the rest of Canada's housing market looks to be running at a moderate pace.

Report an error Editorial code of conduct
Tickers mentioned in this story
Unchecking box will stop auto data updates
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.

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:

  • 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.

Read our community guidelines here

Discussion loading ...

Cannabis pro newsletter