New home construction takes place in a development in Oakville, Ont., on Thursday, Aug. 15, 2019. THE CANADIAN PRESS/Nathan Denette

Canadian homebuilding remains strong despite 20% drop in September, say economists

Economists had expected an annual rate of 240,000 starts in September

Canada’s homebuilding activity remained historically strong last month even though the annual pace of starts plunged 20 per cent from August, economists said Thursday.

Canada Mortgage and Housing Corp. said the seasonally adjusted annual rate of housing starts was 208,980 units in September, down from 261,547 units in August but in line with average readings in 2019.

Economists had expected an annual rate of 240,000 starts in September, according to financial markets data firm Refinitiv.

The decrease was driven by weakness in Ontario and British Columbia and lower starts in condos.

However, the six-month moving average of the monthly seasonally adjusted annual rates of housing starts rose slightly to 214,647 in September, up from 212,609 in August.

“The national trend in housing starts was largely unchanged in September,” said Bob Dugan, CMHC’s chief economist.

COVID-19 has resulted in volatility in multi-family starts, especially in Toronto.

“We expect national starts to trend lower by the end of 2020 as a result of the negative impact of COVID-19 on economic and housing indicators,” he said in a news release.

Broader demand trends remain resilient in the near-term with the level of starts remaining strong by historical standards, said RBC economist Claire Fan.

“Average starts from January to September were one per cent above the same period in 2019 — despite COVID-19 containment measures that shut down wide swaths of the economy in the spring,” she wrote in a report.

“And in Quebec and Ontario, average starts continued to outpace the national comparable while the others, most notably BC, lagged.”

Fan noted that the issuance of permits has remained strong, “suggesting still-solid momentum for housing starts in the near-term.”

Housing starts averaged 237,300 units in the third quarter, up 22.2 per cent from 194,100 units in the second quarter.

“Moving forward, past pre-construction sales gains and low rates should ensure that starts remain elevated through next year,” TD economist Rishi Sondhi wrote.

“Afterwards, some slowing may take place as softer population growth brought upon by the pandemic weighs on housing demand, and ultimately, homebuilding.”

The annual pace of urban starts fell 21.1 per cent in September to 195,909 with starts down in eight of 10 provinces:

Housing starts in Ontario fell by nearly 37,000 units to 78,700 while activity in B.C. fell by 10,900 units to 30,700 units.

Homebuilding activity in Quebec dropped by 7,500 to 48,000 units.

Alberta drove higher starts in the Prairie region where urban starts climbed by 5,700 to 24,800 units, offsetting losses in Saskatchewan and Manitoba.

Starts in Atlantic Canada slipped with declines in every province but Nova Scotia.

The pace of urban starts of apartments, condos and other types of multiple-unit housing projects decreased 27 per cent to 146,005 units, while single-detached urban starts increased 3.4 per cent to 49,904.

Rural starts were estimated at a seasonally adjusted annual rate of 13,071 units.

The Canadian Press

Like us on Facebook and follow us on Twitter.

Want to support local journalism? Make a donation here.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Matthew Wedman was selected in the 2019 NHL entry draft by the Florida Panthers. (Photo by Marissa Baecker/Shoot the Breeze)
Kelowna Rockets MVP inks deal with Charlotte Checkers

Matthew Wedman was the Kelowna Rockets 2019-20 MVP

(Osoyoos Fire Department)
Osoyoos Fire Department knock down car fire near house

Blaze was ‘really close’ to becoming a structure fire

Canadian Horizons is taking steps to develop a 320-unit residential neighbourhood at 1050 Spiller Road, northeast of the City of Penticton. (Canadian Horizons photo)
Penticton Indian Band opposes Canadian Horizons development

Proposed residential development will remove the protected rights of the syilx Nation, says PIB

This picture taken in yesteryears shows how popular the Naramata public beach has been over the years.
(Naramataslow)
It does take a village to save a beach

Nearly $600K raised so far to preserve Naramata park

A puppy is cared for at the Kelowna BC SPCA. Image: BC SPCA
Puppy recovers from virus after being seized from Princeton farm

The pup was one of the 97 animals seized by the BC SPCA in September

Salmon Arm RCMP say residents have been receiving calls from fraudster claiming to be with Publishers Clearing House. (File photo)
Salmon Arm RCMP warn of Publishers Clearing House telephone scam

Police say scammer requests fee to claim sweepstakes prizes

The Summerland Steam will play their first exhibition game of the season on Friday, Oct. 23. Unlike previous years, there will be no spectators allowed in the stands this year in an effort to slow the spread of the COVID-19 pandemic. (Brennan Phillips - Black Press)
Junior B hockey teams to play in empty arenas

Summerland Steam and other teams affected by decision to close facilities to fans

A passer-by walks past a COVID-19 testing clinic in Montreal, Friday, Oct. 16, 2020. THE CANADIAN PRESS/Ryan Remiorz
Canada ‘yet to see’ deaths due to recent COVID surge as cases hit 200,000

Much of the increase in case numbers can be attributed to Ontario and Quebec

Police confirm human remains were found in a recycling bin in Vancouver on Oct. 18, 2020. (Black Press Media file photo)
Human remains found in recycling bin floating near Vancouver beach

Police asking nearby residents to see if their recycling bin has gone missing

A file photo of an RCMP dog. (Campbell River RCMP photo)
Lawsuit claims Kelowna man suffered ‘vicious’ attack by RCMP dog, handler

Fernando Verde claims he was resuscitated at the hospital and needed emergency surgery following the attack

B.C. Liberal leader Andrew Wilkinson visits a North Vancouver daycare to announce his party’s election promises for child care, Oct. 9, 2020. (B.C. Liberal Party video)
B.C. parties pitch costly child care programs in pandemic

B.C. Liberals say they’ll deliver on NDP’s $10-a-day promise for lower-income families

A B.C. man decided to create a website to help people find family doctors accepting patients. Because Victoria is considered high-demand, clinic openings can’t be posted publicly. (Unsplash)
Vancouver Island man starts website that connects B.C. residents with doctors

Nanaimo man started project to help people find family physicians accepting patients

Voting station at Tzeachten Hall in the riding of Chilliwack-Kent on the first day of advance voting in the provincial election on Oct. 15, 2020. (Paul Henderson/ Chilliwack Progress)
B.C. VOTES 2020: 380,000 British Columbians head to polls in first 4 days of advance voting

Some of highest voter turnout so far has been seen on Vancouver Island and in Shuswap

Most Read