February was not a good month for homebuilders in Calgary and Edmonton when it came to the construction of new single-detached homes.
Data released Friday by Canada Mortgage and Housing Corp. indicated housing starts for single-detached properties were down 30 per cent year over year in the Calgary census metropolitan area to 207 units. In the Edmonton census metropolitan area, they fell by 36 per cent to 221 units. Across Alberta, they were down 34 per cent to 518.
In the multi-family sector, starts in the Calgary region were up 40 per cent year over year to 395 units while in the Edmonton region they fell by 21 per cent to 383. Across Alberta, they were down five per cent to 876.
“Housing starts in all segments of the market trended lower in February. While the number of starts and units under construction has been slowing in recent months, the number of completions continue to outpace absorptions, which is contributing to rising inventory levels in the ownership market. The slow economic recovery across Alberta combined with other demand headwinds continue to impact homeownership activity in Edmonton,” said the CMHC.
The federal agency reported that the trend in housing starts was 203,554 units in February compared to 207,742 units in January. The trend measure is a six-month moving average of the monthly seasonally adjusted annual rates of housing starts.
“The national trend in housing starts resumed its downward trajectory in February while still remaining above historical average,” said Bob Dugan, CMHC’s chief economist. “Both single-detached and multi-unit dwellings starts trended lower. Higher mortgage rates combined with still-favourable, but less stimulative economic conditions have contributed to softer demand on new home markets in urban centres.”
“Residential investment was downright ugly in the fourth quarter, and the latest reading on housing starts only added to the bad news on Canadian homebuilding. Housing starts slowed from a pace of 207,000 in January to only 173,000 in February, the slowest monthly pace in four years,” said Royce Mendes, an economist with CIBC Economics, in a commentary note.
“The only silver linings were that much of the drop came from the volatile multiples category, and part of the slowdown could have been due to colder than usual weather in February. Prior to this reading, starts had seen a bit of a renaissance, rising back above 200,000 for four straight months. But the market has been a contending with the effects of higher interest rates and stricter lending standards, and a pace of 200,000 looked unlikely for the year as a whole. With building permits yesterday also falling, 2019 is shaping up to be a tougher year for homebuilding.”
– Mario Toneguzzi
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