Canadian housing starts in July were stronger than expected

July’s surprising housing starts results

The housing starts data is divided into single-family houses, townhouses or small condos and apartment buildings with five or more units.

The biggest winner was Montreal, with total SAAR housing starts up 47%, showing some recovery from a historically low year for new home construction in 2023.

Meanwhile in Vancouver, actual starts are down 18% in 2024 compared to 2023, but at the same time, 2023 was a record year for new home construction in the region. In Toronto, actual year-to-date housing starts are down 9.5% when compared to the same period in 2023.

The standalone SAAR rates are as follows:

• Total urban housing starts in centres with populations of 10,000 or more rose by 17%, reaching 261,134 units
• Multi-unit urban starts saw a significant increase of 21%, climbing to 217,306 units
• Single-detached urban starts edged up by 2%, totaling 43,828 units
• Rural starts were estimated at a seasonally adjusted annual rate of 18,375 units

The jump in multi-unit urban starts is just shy of the highest since at least 1990 – there were three higher single-month readings since 2021.

“This is an impressive show of resilience given the subdued resale market, and shows that builders continue to crank out just about as much new supply as they can given capacity constraints and market conditions,”writes Kavcic.

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Ontario’s strong month

Alberta had a strong month, second only behind Ontario, with 50,600 starts compared to June’s 42,400. It marks the first time housing starts in the province have pushed above 50,000 since 2015. It’s important to note the province’s population is growing 4% year-over-year.

In third was BC with 48,000 starts, then Quebec with 44,000, and Manitoba and Saskatchewan combined to round out the top five with 15,700.

However, most of the growth was seen in Ontario with 106,200 starts compared to 67,700 the month prior. Kavcic has a few explanations for this disconnect between the resale market slowdown in the province and the clearly still strong building activity.

The first explanation is that construction activity has already started to ebb, with the 12-month average for multi-unit starts running at 67,000 – or down 13% from the 2023 high. Meaning that there is already an indication of cyclical weakness, with the caveat that multi-unit starts tend to vary wildly.

“Purpose-built rentals/affordable housing have been pushed hard through various policy channels, and this accounts for a growing portion of new construction,” writes Kavcic.

“The number of units under construction (in Toronto) for homeownership has fallen by almost 20% since early-2023, while that for rental purposes has risen to record highs. This dynamic is probably taking some cyclicality out of residential construction (which is usually a highly cyclical sector).”

Of course, there remains an excess demand for housing that exceeds supply – as is the case with all of Canada.