Canadian new housing construction rises in January, residential investment to support overall growth in 2020

Canadian new housing construction rose 8.8 percent sequentially in January to 213.2k units. The print surpassed market expectations of 205k starts in the month. The rise was mainly seen in multi-family starts, which rose 13.2 percent to 158.1k units. On the contrary, single-detached units dropped 2.1 percent sequentially to 55.1k units.

Region wise, starts rose 41k to 77.0k units in Quebec – the second highest level since the 1990s. The rise also rose in Ontario but stayed relatively low. Starts also rose in New Brunswick, Manitoba and Saskatchewan, although they remained low in the latter province.

Meanwhile, comparatively falls were seen in Alberta and B.C., with lesser falls occurring in the rest of the Atlantic Region. The upside surprise in homebuilding also speaks to supportive fundamentals, including sharply rising home prices, low interest rates, strong population growth, low rental vacancy rates in key markets and programs to incent rental construction, said TD Economics in a research report.

“Weather impacts aside, homebuilding remains healthy on a trend basis, with the 3 and 6 month averages above 200k units. And, a strong gain in residential permit issuance in December (also reported today) speaks to this solid trend being maintained in the near-term. January's positive print is consistent with our forecast calling for residential investment to support overall growth in the first quarter, and 2020 as a whole, helping offset weakness in other areas of the economy”, added TD Economics.