CMHC Says New Home Construction Jumped 14% In February From Previous Month

  • 03/15/24
  • |          Ontario

Bounce-back from January was anticipated, says economist

The annual pace of new home construction climbed 14 per cent in February compared to the previous month, Canada Mortgage and Housing Corp. said on Friday.

The national housing agency says the seasonally adjusted annual rate of new home construction — also known as housing starts — amounted to 253,468 units in February, compared with 223,176 in January.

That was higher than the 230,000 units economists were expecting.

“A bounce-back in starts was anticipated in February after January’s decline. However, they continue to trend at a solid level, supported by rising construction of purpose-built rental units and elevated home prices,” wrote TD economist Rishi Sondhi in a note.

Housing starts in the first two months of the first quarter are below their fourth-quarter level, Sondhi added, “suggesting some potential downward pressure on residential investment growth in the first quarter.”

TD Bank thinks that housing start figures will continue to decline as past weakness in home sales translates to fewer homes built, Sondhi said.

Some of the increase is likely due to the unusually mild winter weather that we’ve seen this year, according to economist Katherine Judge of CIBC Economics.

The weather might also be driving activity in the resale market, she wrote, “along with optimism for [Bank of Canada] rate cuts later this year.”

When looking at year-over-year figures, February’s actual housing starts were 10 per cent higher in Toronto and 82 per cent higher in Vancouver because of higher multi-unit starts.

Montreal’s actual starts dropped nine per cent, with multi-unit and single-detached starts both falling.

The six-month moving average of the monthly seasonally adjusted annual rates of housing starts in February was 245,665, up by 0.4 per cent from 244,638 in January.

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