A surge in multiple-unit home construction boosted Canada’s housing starts activity to its highest level since 2007, according to new data from the Canada Mortgage and Housing Corporation.
Nationwide, housing starts increased by almost 7% month over month in August, with the seasonally adjusted annual rate at 262,396 units, the highest in 13 years. The annual pace of urban starts had a similar 7.1% increase in August to 248,154.
Taken together, the annual pace of urban starts involving apartments, condos, and other multiple-unit housing projects grew by 9.1% to 201,214 units. To compare, single-detached urban starts ticked down by 1% to 46,940.
By province, the largest year-over-year increases in starts were seen in Ontario (32%) and Quebec (18%).
“To say ‘this is a solid level of building activity considering the pandemic,’ and all that, would be a massive understatement,” said Robert Kavcic, senior economist at BMO Capital Markets Economic Research. “Another very strong showing in August suggests that builders have fully made up any lost time during the spring. Where we go from here is another question.”
Bob Dugan, chief economist at CMHC, echoed these reservations, saying that the Crown corporation is projecting a slower housing starts trend by the end of the year.
This period will coincide with a sizeable increase in housing inventory, which will precede a possible arrears spike.
A recent Better Dwelling analysis said that widespread lack of liquidity will become more apparent in the first few months of 2021. At the same time, many struggling Canadians will be thus forced to put up their properties for sale.
“The inability to pay doesn’t always turn into defaults when there [are] buyers,” Better Dwelling said. “Instead, people list their homes for sale and hope it sells and closes before the lender tries to claim it. … We should see a spike in inventory first.”