As per a new Canada Mortgage and Housing Corporation report, Canadian housing starts have unexpectedly shown an impressive rise despite high interest rates continuing to act as a roadblock in residential construction. The housing starts in July shot up by 16% at 279,509 units up from June’s 241,643 starts. The 37,866 more units mark the highest year-over-year rise in metrics this year as yet. Previously, February witnessed a rise of 14% in starts compared to January. It’s worth noting June a year-over-year loss of 9%.
CMHC also reported that year to date, major urban centers have recorded 132,823 starts which is a 7.5% jump over July of last year.
An analysis of the data shows the rise in starts can be attributed to new multi-unit developments breaking ground in the country. This year there has been a 17% rise in multi-unit construction with 261,134 units. Single-detached urban starts also saw a surge albeit just 2%.
Desjardins Economist Kari Norman explained the news is not all to go bananas over saying, “Many of the projects breaking ground last month were financed prior to the recent monetary tightening cycle, which has helped to keep housing starts aloft.” She further explained the challenges facing the construction industry, “This optimism is tempered by challenges such as construction labour shortages, inflation in building materials costs and weaker homebuilder sentiment.”
As per Norman’s analysis government efforts in favor of housing starts must help the builders. She also noted that major help for the developers comes from the declining interest rates.
As of now, the direction of the housing industry in the country remains uncertain. However, the rise in housing starts is definitely a positive sign.
