The annual pace of housing starts in July climbed 16% compared with June as starts of multi-unit projects shot higher for the month, Canada Mortgage and Housing Corp. says.
The national housing agency said Friday the seasonally adjusted annual rate of housing starts for July was 279,509 units, up from 241,643 in June.
“Builders broke ground on a larger-than-expected number of units in July, with Ontario recording the best month in over a year,” TD Bank economist Maria Solovieva wrote in a report.
However, Solovieva noted that despite the rebound, housing starts remain below the multi-decade highs observed in 2021 and 2022, particularly in single and semi-detached units.
“We expect multi-family units to soon contribute to this decline, given weak pre-sale activity in recent years and elevated borrowing and construction costs,” she wrote.
The supply of affordable housing has been a key political issue. Governments at all levels have been trying to do what they can to help boost new construction.
The housing starts report followed figures from the Canadian Real Estate Association on Thursday that showed while home sales in July were up 4.8% compared with a year ago, on a seasonally adjusted basis, they were down 0.7% from June this year.
BMO senior economist Robert Kavcic said residential construction activity remains sturdy in Canada despite the clear slowdown in the resale market.
“The fact that such a cyclical component of the economy hasn’t buckled under sharply higher borrowing costs suggests that the more structural forces still at play are outweighing some pockets of weakness,” Kavcic wrote in a report.
CMHC said the annual pace of urban starts rose 17% to 261,134 units for the month.
The annual rate of urban starts of multi-unit homes increased 21% to 217,306 in July, while the pace of single-detached urban starts rose 2% to 43,828 units.
The annual pace of rural starts was estimated at 18,375 units for the month.
CMHC said the six-month moving average of the seasonally adjusted annual rate of housing starts in Canada was up 3.2% at 255,783 units in July compared with 247,840 in June.
On Thursday, the Canadian Real Estate Association said the housing market softened slightly in July from a month earlier as sales of existing homes dipped and new listings inched up.