Canadian Housing Starts (July)

Canadian housing starts slipped to 193,000 annualized units in July, essentially in-line with expectations and down from the prior month's 202,300 print (revised a shade lower). Year-to-date, housing starts have averaged a 185,200 annualized pace, which is consistent with demographic demand, but inconsistent with past national recessions. Indeed, while activity in Alberta and Saskatchewan has been scaled back since oil prices began to slide, the rest of the country has held steady or seen activity increase.

Both single- and multi-unit starts edged down in July, but the big picture continues to be that the latter is outpacing the former by a 2-to-1 margin. Interestingly, CMHC notes that recent gains in multi-unit construction have been in purpose-built rental units (the vacancy rate in Toronto, for example, remains little over 1% despite increased condo supply), and that a "substantial portion" has been in seniors' residences.

Regionally, most provinces (7 of 10) saw starts fall in July. British Columbia was one exception, where activity continues to break out above the stable multi-year range that has been in place since 2010. On the flip side Alberta continues to see new construction activity fade (not collapse) alongside lower oil prices. In the latest 4 months, housing starts in the province are running at a 36k annualized clip, down from just over 40k for all of 2014. Ontario saw the largest pullback in July, a second straight decline after a number of new condo projects broke ground in Toronto in the spring. Quebec and Atlantic Canada, while dipping in July, have bounced back from multi-year lows around the turn of the year (part of that was weather related).

"We'll just reiterate that, while there are regional weak spots and strong spots, there is hardly a hint of recession in the national housing market figures. Overall Canadian construction activity continues to look very sturdy", says BMO Economics.