Canadian Housing Starts (March 2024)

Housing starts decline in March

• Canadian housing starts came in at 242.2k annualized units in March, representing a 7% month-on-month (m/m) decline from February's level. The six-month moving average of starts was 244.0k units in March, down 1.6% m/m from February. 
• Multi-family urban starts decreased 8% m/m to 180.2k units in March. Meanwhile, urban single-detached starts dropped 4% m/m to 40.5k units.
• Urban starts were down in 5 of 10 provinces:
  • The largest declines were in Ontario (-14.9k to 69.8k units) and Alberta (-9.0k to 38.6k units), although starts were also down across most of the Atlantic in March.
  • The most notable gain took place in B.C. (+14.4k to 58.7k units), with more modest gains chalked up in Quebec, the rest of the Prairies and PEI.

Key Implications

• Last Friday the federal government released its Canada Housing Plan, aiming to boost new housing supply by a total of 3.87 million additional homes through 2031. While it will take some time for these federal policies to impact the market, in the here and now, housing starts continue to trend at a solid pace (even with March's decline), supported by elevated prices and firm pre-construction sales in the past. Meanwhile, purpose-built rental construction has been lifted by strong rent growth and government programs. 
• While governments are actively looking for ways to enhance supply, we think that housing starts are likely to decline further this year, on the back of more recent weakness in pre-sales activity. What's more, industry analysis suggests that financing for purpose-built rental units currently under construction was obtained when borrowing conditions were more favourable. As they've turned tougher, this segment of the market could be impacted.           

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