Canadian housing starts rise strongly in June, homebuilding activity to remain afloat through remainder of 2020

Canada’s housing starts recorded a strong rise in the month of June. Starts rose at a solid 211.7k (annualized) units, up from 195.4k units seen in May. With June’s rise, housing starts were at their highest level since January. On a six-month moving average basis, starts were 199.7k units, up from 197.1k in May.

The rise in June was mainly driven by the multi-family segment, where urban starts rose 13 percent to 154.6k units, while urban single-detached starts fell 4.5 percent to 42.1k units. Looking across a longer-term horizon, construction of apartments has kept starts activity healthy in recent years, countering the downtrend in single-detached starts, said TD Economics in a research report.

Province wise, five of 10 provinces recorded higher starts in June. Ontario drove the monthly rise, where starts rose 20.6k to 78.2k units. This put the level of starts slightly above its five-year average. Starts pulled back a bit in the Prairies, as gains in Saskatchewan and Manitoba were countered by another fall in Alberta. 

Starts were also down in the Atlantic Region on falls in Nova Scotia and New Brunswick. Starts remain mostly unchanged in B.C. at 39.1k units, although homebuilding has been trending downwards in the province since the latter part of 2019. Starts eased in Quebec, but the level was quite solid, remaining amongst the highest seen in the history of the series.

“This result is, in part, a function of past housing demand, which has been solid. And, we expect this prior demand strength to keep homebuilding activity afloat through the remainder of the year and into 2021. However, over the medium term, starts should ease as population growth slows”, added TD Economics.