Skip to main content
The Globe and Mail
Support Quality Journalism.
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
Just$1.99
per week
for first 24 weeks

Enjoy unlimited digital access
Enjoy Unlimited Digital Access
Get full access to globeandmail.com
Just $1.99 per week for the first 24 weeks
Just $1.99 per week for the first 24 weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(select.open)}function setPanelState(o){dom.root.classList[o?"add":"remove"](select.open),dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); } //

Is Canada's housing market finally coming in for a soft landing – or is it just stuck in the snow?

That's the key question following Canada Mortgage and Housing Corp.'s housing-starts report for January, which showed that construction starts of new homes fell to an annualized rate of 180,200 in January – the slowest pace in nine months, and below economists' expectations. Since topping 200,000 last fall, sparking renewed concern about a Canadian housing bubble, housing starts have receded rapidly over the past three months.

Urban multiple-unit starts – essentially, the condo market, which is notable for its volatility and has long been considered overheated – fell by 6 per cent in the month, their third straight decline. Urban single-family starts rose 3.4 per cent, but that's after posting their lowest non-recession rate in 17 years in December.

Story continues below advertisement

The January pace is roughly in line with, or even a bit below, the number of new households formed each year in Canada. After spending the better part of the past three years producing more homes than the country's demographic trend seemed to support, construction is showing signs of returning to sustainable levels.

Or maybe not. Market watchers worry that the slowdown may be a weather-induced mirage, caused more by a miserable winter than by a genuine cooling of the Canadian housing market.

CMHC's housing start numbers are seasonally adjusted, which means that, as much as possible, they have been statistically corrected to factor out the typical fluctuations in building activity that come with a Canadian winter. But seasonal adjustments are based on historical norms; they can't fully account for months where the weather is considerably outside the range of normal. For large swaths of the country, this winter has been far beyond normal: Bitter cold, heavy snowfall, crippling ice storms. Those are all conditions that could contribute to construction delays, rather than true declines.

It's pretty hard to assess weather-related statistical hiccups anywhere other than the rear-view mirror; we won't know for sure if the recent home construction slowdown was merely temporary until spring arrives and we see whether there's a bounce-back. Still, the six-month rolling average for housing starts – a figure CMHC uses to identify a longer-term trend – sat at 191,500 in January, a third consecutive monthly decline.

Meanwhile, residential building permits – indicative of builders' intentions in the coming months – fell more than 9 per cent in December (the most recent month available). That's their lowest level in nearly a year, though again, there may well have been a strong weather-related component to the figure.

Bank of Montreal senior economist Robert Kavcic noted that the inventory of completed new homes that haven't yet been absorbed (i.e. bought) by the market has been declining since last spring – a sign of a market moving closer into balance. Meanwhile, home sales nationally have declined for three straight months, and the Teranet-National Bank of Canada home price index has been flat since the summer.

The trends all point to a moderation of the housing market in 2014; indeed, economists forecast that housing starts for the full year will be roughly in line with January's pace. But the trend has fooled us before. Remember that housing starts were a mere 155,000 annual rate a year ago, and averaged barely 170,000 through the first four months of last year, before the apparent slowdown was obliterated by a resurgence of demand, and construction through the middle of the year. Before we get too excited about this welcome cooling of Canada's housing boom, we'd better wait to see which way the snow blows.

Your Globe

Build your personal news feed

  1. Follow topics and authors relevant to your reading interests.
  2. Check your Following feed daily, and never miss an article. Access your Following feed from your account menu at the top right corner of every page.

Follow the author of this article:

View more suggestions in Following Read more about following topics and authors
Report an error Editorial code of conduct
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 ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies