New home construction picked up the pace in August as builders started up again
Housing starts increased 7% from July's level to seasonally adjusted annual pace of 262,396
Builders broke ground on more new homes in August amid a surge in construction on apartments, condos and other types of multiple-unit housing projects in urban centres.
The annual pace of housing starts in August rose nearly seven per cent compared with July, Canada Mortgage and Housing Corp. reported Wednesday.
The housing agency said the seasonally adjusted annual rate of housing starts was 262,396 units in August, up from 245,425 units in July. That's the highest level of housing starts since 2007.
The increase came as the annual pace of urban starts increased 7.1 per cent in August to 248,154. The pace of urban starts of apartments, condos and other types of multiple-unit housing projects climbed 9.1 per cent to 201,214 units, while single-detached urban starts fell 1.0 per cent to 46,940.
"Higher multi-family starts in Ontario, including Toronto, drove the national increase," said Bob Dugan, CMHC's chief economist, in a statement.
Quebec and Ontario led growth
Quebec and Ontario cities led the country in terms of the volume of new homes under construction, with levels jumping 18 per cent and 32 per cent, respectively, compared to August 2019.
Ottawa, Regina, and Sherbrooke, Que. saw sizable jumps in construction compared to August 2019. Cities in Prince Edward Island also saw construction on new homes jump more than 150 per cent in August compared to the same time last year.
Rural starts were estimated at a seasonally adjusted annual rate of 14,242 units.
The six-month moving average of the monthly seasonally adjusted annual rates of housing starts rose to 213,144 in August, up from 204,597 in July.
"To say `this is a solid level of building activity considering the pandemic,' and all that, would be a massive understatement," said Robert Kavcic, senior economist at BMO Capital Markets Economic Research, in a note to clients.
"Another very strong showing in August suggests that builders have fully made up any lost time during the spring. Where we go from here is another question."
Despite August's construction boom, Dugan said CMHC expects housing starts to trend lower by the end of the year, as the COVID-19 pandemic weighs on the economy and housing sector.
Royce Mendes of CIBC Economics said that housing demand from immigration and students has waned, causing rents to fall. In turn, Mendes wrote in a client note, investors may become less interested in funding new apartment and condo buildings.
"(The) fact that so much of the recent strength has been focused in the multi-unit sector presents a risk," Mendes wrote.
"We continue to see the pace of building activity cooling as the year winds down, particularly as mortgage and other loan payments resume after a period in which many households took advantage of deferrals."