Canada’s housing starts likely to remain steady around 190k units in 2016 and ease slightly in 2017

Canada’s housing starts in April was 191k annualized units, easing from March’s levels. The six-month moving average housing starts rate remained stable at 195k units. The drop in housing starts was spread throughout single-family homes and urban multi-units that fell 4.2% and 5.8% respectively. Housing starts for multi-units continue to be around historical averages, while single-family home construction is close to record lows, noted TD Economics.

Region wise, housing starts drop was mainly seen in Quebec and Ontario on a monthly basis. Meanwhile, in the provinces of Prairie and Atlantic, housing starts rose nearly 38% and 42% respectively. B.C. also recorded strong housing starts at 14.4%.

Trend wise, markets having strongest gains in home price are witnessing solid building activity, including the markets in B.C. and Ontario as builders respond to conditions of tight supply and increasing demand. The overall the housing market is robust, but in the near term the market will face very few obstacles, said TD Economics. The markets are expected to ease in 2017, added TD Economics.

In the mean time, new home construction is likely to remain soft throughout Canada because of the high extent of overbuilding across the country and weak economy, especially in the Prairies, according to TD Economics.

In future, the housing starts are expected to witness certain volatility due to the wildfires in Fort McMurray. Alberta is expected to experience drops in housing starts in June since a considerable amount of resources from the provinces will be utilized in combating the wildfires. However, attempts for reconstruction are expected to stimulate starts for a brief period of time in the following months, said TD Economics.

“Housing starts are expected hold steady at around 190K units this year before edging down to 182 units next year”, added TD Economics.