The Canada Mortgage and Housing Corporation released its housing starts results for December 2018, reporting an elevated annual level when compared to historical averages.
That said, housing starts trended downward in December 2018 with 206,981 units, compared to 212,338 in November 2018. The trend is a six month moving average of seasonally adjusted annual rates (SAAR).
"The national trend in housing starts decreased in December, the fifth decline in the last six months," says Bob Dugan, CMHC's chief economist. "Reflecting these recent declines, total annual housing starts in 2018 were lower than in 2017, as lower single-detached starts more than offset a slight increase in multi-family starts this year. Nonetheless, total housing starts remain elevated when compared to historical averages."
The standalone monthly SAAR was 213,419 units, down from 224,349 in November. The monthly SAAR of urban starts dropped 5.8% with 194,594 units, with multiple starts decreasing 6.8% with 144,728, and single-detached starts 2.6% lower at 49,866. Rural starts are estimated at 18,825.
In Toronto CMA, overall starts increased 6% year-over-year, recording the most apartment starts ever. New detached starts slowed down to its lowest number in four decades due to high prices, borrowing costs, and a widening price gap between new and resale options. The high priced low-rise homes are pushing more and more buyers to the new condo market.
Hamilton is seeing a similar trend with apartment starts trending at a record high. Overall, the region’s annual starts were the highest since 2004, though the trend measure fell in December. CMHC says the demand for new apartment units is strong in Hamilton, Burlington, and Grimsby.
People are still buying detached homes though in places like Brantford where housing starts just surpassed 700 for the second time in the last decade. The relatively affordable detached homes attracted growing families and empty nesters from Hamilton and the West GTA. Brantford also hit a record high number of row starts.
Looking further east, December was a busy month in Kingston, where starts hit their highest monthly levels since September 2013. Last month, rental apartments accounted for 77% of the starts. This is good because Kingston’s vacancy rate has been trending low since 2016. Once these rental units are available, they will fill up quickly.
Throughout 2018, Canadian housing starts slowed, But Ontario was busy because of the high number of sales in 2016 and 2017. Many of these homes just started construction in 2018. We’re interested to see what happens with the housing starts trend in 2019 as the market moderates.