(Ottawa) The pace of residential starts accelerated in February across the country, as more apartments and condominiums broke ground. However, Quebec and its metropolis seem to be going against this trend.
According to data released Friday by the Canada Mortgage and Housing Corporation (CMHC), housing starts jumped 14% in February from the previous month, to 253,468, at a seasonally adjusted annual rate, which allows for a better comparison from one month to the next.
However, CMHC noted declines in four provinces, Quebec, Prince Edward Island, Newfoundland and Labrador and Saskatchewan, over the last two months. The number fell from 38,961 to 34,542 in Quebec, a drop of 11%.
Looking at the year-over-year numbers, housing starts in February were up 11%. This increase is entirely due to that of starts of collective housing, which increased by 16%, while starts of single-family homes decreased by 14%.
“As the national housing shortage continues, developers continue to focus on building multi-family housing in Canada’s major centers,” CMHC Chief Economist Bob Dugan said in a statement.
Month-to-month construction starts can fluctuate considerably, as the launch of larger collective projects can skew the numbers. In February, adjusted housing starts increased by 79% in Vancouver, but they were down 31% in Montreal.
To smooth out these fluctuations and provide a clearer picture of the future trend in housing supply, CMHC also publishes a six-month moving average of the adjusted rate. In February, the indicator showed 245,665 housing starts, up 0.4% compared to January.
This pace is lower than the more than 277,000 housing starts recorded in Canada over a six-month trend in late 2022, before rising interest rates hit borrowing costs and spark fears of recession.
Anticipated slowdown
CMHC and analysts expect housing starts to slow this year as tougher borrowing conditions and labor shortages affect the pace of construction.
Housing starts in the first quarter should decrease compared to the fourth quarter of last year, estimates TD economist Rishi Sondhi in a note.
During the first two months of the first quarter, residential starts are below their level in the fourth quarter, suggesting potential downward pressure on residential investment growth in the first quarter.
Rishi Sondhi, TD economist
“We expect them to decline as the year progresses as past weakness in residential sales spills over into home construction,” he added.
The increase in February could be partly linked to weather conditions, says CIBC analyst Katherine Judge.
“Part of this increase is likely due to the atypically mild temperatures experienced this winter, which could also support activity in the resale market. »
Rate cuts expected later this year are also helping to boost the resale market, which, economy-wide, could help offset the slowdown in construction, she says.
“Residential construction should still experience a slight decline in the first quarter overall, but the drag on GDP growth due to residential investment will be limited by the increase in resale activity,” estimates Mme Judge.