The number of housing starts in the Calgary region fell by 11 per cent in May from year-ago levels, according to new data released Monday by Canada Mortgage and Housing Corporation.
The federal agency reported that single-detached starts of 262 in the Calgary census metropolitan area for the month was down 11 per cent from May 2019 while the ‘all other’ category, which includes condos, also fell by 11 per cent to 459 units.
In the Edmonton census metropolitan area single-detached starts dropped by 18 per cent from a year ago to 275 units while the all other category rose by 52 per cent to 395 units.
Across Alberta, housing starts in the single-detached market decreased by 17 per cent to 647 units while the all other category fell by six per cent to 954 units.
The agency said the survey for April was conducted in each province with the exception of Québec, following the introduction of pandemic measures in the province in late March. Residential construction in Québec resumed on April 20. CMHC said it resumed the survey in Québec in May and Monday’s report includes national housing starts totals without Québec in order to assess the impact of the COVID-19 pandemic where the survey was conducted in both April and May.
The CMHC said the trend in housing starts was 196,750 units in May 2020, down from 198,644 units in April 2020. Excluding Quebec, the trend was 151,072 units in May 2020, down from 155,600 units in April 2020. This trend measure is a six-month moving average of the monthly seasonally adjusted annual rates of housing starts, added the federal agency.
“Outside of Quebec, the national trend in housing starts decreased in May,” said Bob Dugan, CMHC’s chief economist. “Higher multi-family starts in Ontario and the Atlantic provinces were offset by declines in British Columbia and the Prairies. We expect national starts to continue to register declines in the near term, reflecting the impact of COVID-19 measures.”
The CMHC said uses the trend measure as a complement to the monthly SAAR of housing starts to account for considerable swings in monthly estimates and obtain a more complete picture of Canada’s housing market.
“The standalone monthly SAAR of housing starts for all areas in Canada excluding Quebec saw a decrease of 20.4 per cent in May from April. The SAAR of urban starts decreased by 21.6 per cent in May. Multiple urban starts decreased by 27.2 per cent while single-detached urban starts decreased by 3.9 per cent,” said the CMHC.
“Rural starts were estimated at a seasonally adjusted annual rate of 7,772 units excluding Quebec.”
Nathan Janzen, Senior Economist with RBC Economics, said the magnitude of the resilience in housing starts is surprising.
“There are still significant go-forward risks for residential building activity. Home resales have plunged. Labour markets are still exceptionally soft despite an increase in May employment , and we expect the unemployment rate to remain elevated even once exceptional government income supports for those losing work due to COVID-19 are set to expire. And that means some of the weakness in near-term economic indicators that would normally be expected might not show up until later this year. Still, housing starts are just the latest in a string of economic indicators that have looked less-bad than expected over the last month. The broader economic recovery is still likely to be gradual – mirroring gradual expected easing in social/physical distancing rules. But the recent near-term data flow has clearly been less discouraging than was expected even a few weeks ago,” he said.
Robert Kavcic, Senior Economist with BMO, said residential construction activity wasn’t shut down nearly as aggressively as some other sectors of the economy through the worst of the COVID-19 pandemic.
“Even in Quebec, where the sector was fully locked down for a brief period, the rebound has been swift. To be fair, some of this activity likely reflects pre-COVID demand coming to the construction phase. But, even if we assume activity runs about 15 per cent below pre-COVID trends through the rest of the year, the 2020 housing starts tally would come in around 190k—that’s meaningfully stronger than even the high end of some widely-publicized bearish forecasts out there. Longer term, the fate of demographic flows will help dictate where the new equilibrium level of activity settles, and on that front there is probably downside risk versus where we were pre-COVID,” he said.
