Construction and Consumption: Tracking Q1 Housing Starts

This report delves into the trends of housing starts in Canada during the first quarter of 2024, focusing on their impact on the secondary wood manufacturing industry. We examine the shifts in residential construction, from single-family homes to larger multi-unit complexes, to understand how these changes affect the demand for wood products.

For stakeholders such as cabinet manufacturers, furniture makers, and millwork businesses, keeping pace with these trends is crucial. It helps them anticipate the need for raw materials and adjust their production and inventory strategies effectively. Our goal with this analysis is to provide clear, actionable insights that will assist these businesses in navigating the market’s fluctuations and making informed decisions. This way, they can better align their operational strategies with the evolving needs of the construction sector.

Housing Starts in Q1 2024

In the first quarter of 2024, Canada’s housing starts showed a dynamic yet fluctuating trend. January commenced with a total seasonally adjusted annual rate (SAAR) of housing starts at 223,589 units, marking a 10% decrease from December 2023’s 248,968 units. This downturn continued into February, though at a slower pace, before the trend slightly reversed in March with housing starts picking up, yet still not reaching the heights of the previous months.

Comparatively, when looking at the same period in the previous year, there was a noticeable variability. For instance, despite a month-to-month decline in January 2024, the year-over-year data for the same month showed an increase of 13% in the actual number of housing starts across urban centers with populations over 10,000, which was primarily driven by a surge in multi-unit starts.

Key factors influencing these trends included economic conditions such as GDP growth rates, employment levels, and notably, the shifts in interest rates which are closely tied to housing market activities. Government policies, especially those related to housing and urban development, also played a significant role in shaping these trends.

These fluctuations are visually represented through charts and graphs within this section, illustrating both the monthly SAAR and actual starts to provide a clear, comprehensive view of the market’s movements. This visual representation, coupled with detailed statistical analysis, offers a solid foundation for understanding the current state of the housing starts landscape in Canada.

Secondary Wood Manufacturing Industry Impact

The fluctuating housing starts in the first quarter of 2024 have direct implications for the secondary wood manufacturing industry. For instance, the robust increase in multi-unit housing starts, particularly noted in urban areas like Toronto, directly correlates with heightened demand for wood products utilized in cabinetry and millwork. These products are essential components of apartment buildings and condominiums, which saw significant construction boosts.

Conversely, the variability in single-detached housing starts affects demand differently. While these starts require more extensive woodworking for individual units, such as custom furniture and elaborate millwork, the slowdown in March highlights a potential decrease in demand for such bespoke items. Therefore, businesses involved in manufacturing wood products for single-detached homes might have experienced a temporary dip in demand.

Amidst these shifts, several challenges emerge, notably supply chain disruptions and the volatility of wood prices, which can significantly impact production costs and profit margins. For example, sudden increases in multi-unit housing starts can strain raw material supplies, leading to longer lead times and increased costs.

However, these challenges also present opportunities. Wood manufacturers can leverage trends in housing starts to better forecast demand and adjust their inventory management strategies accordingly. Diversification of product lines to include both components for high-volume multi-unit developments and bespoke items for single-detached homes can also help stabilize revenue streams.

By adapting production planning and expanding product offerings, businesses in the secondary wood manufacturing industry can not only mitigate risks associated with market volatility but also capitalize on emergent opportunities driven by evolving housing start trends.

Regional Insights and Specific Impacts

The regional analysis of housing starts in major Canadian cities—Toronto, Vancouver, and Montreal—reveals distinct trends that uniquely influence the local secondary wood manufacturing industries.

Toronto: The city witnessed a significant rise in housing starts, especially in the multi-unit sector, which surged by 179% compared to the previous quarter. This dramatic increase has bolstered demand for wood products used in multi-unit residential buildings, such as engineered wood panels and prefabricated wood components. Local wood manufacturers have responded by scaling up production capabilities to meet the burgeoning demand, navigating challenges like supply chain delays and raw material shortages due to increased consumption.


Vancouver: In contrast to Toronto, Vancouver experienced a mixed trend with a notable 55% decline in multi-unit housing starts early in the quarter, followed by a recovery. This volatility has created uncertainty for wood manufacturers, impacting their inventory management and production scheduling. Despite these challenges, the demand for luxury wood products remains robust, driven by Vancouver’s high-end single-detached housing market, which requires custom woodworking and high-quality finishes.


Montreal: Housing starts in Montreal showed a moderate decrease, particularly affecting the multi-unit segment. This has led to reduced demand for mass-produced wood products like framing lumber and plywood. However, the decline has also opened opportunities for wood manufacturers to explore niche markets, such as renovation and retrofitting existing housing units, which can be less sensitive to new housing market fluctuations.

These regional disparities underscore the need for wood manufacturers to remain agile, adapting their business strategies to align with local market conditions and construction trends. By leveraging regional insights, businesses can better position themselves to take advantage of local demand fluctuations, optimizing their operations to cater to specific market needs while mitigating risks associated with regional economic variability.

Future Outlook and Strategic Recommendations

As we look towards 2024-2026, the housing starts landscape is anticipated to navigate through periods of contraction followed by recovery. Initially, the market may face a downturn in 2024, influenced largely by the residual effects of heightened interest rates. A rebound is expected in the subsequent years as these rates stabilize and supportive government policies come into effect, enhancing construction activity.

Strategic Recommendations:

  1. Scaling Operations: Flexibility in operations will be crucial. For regions experiencing growth, such as areas with increased multi-unit construction, businesses should consider expanding production capabilities. Conversely, in regions bracing for a downturn, it would be wise to streamline operations to maintain efficiency and minimize costs.
  2. Leveraging Technology: Implementing advanced manufacturing technologies like CNC machinery and automation can significantly boost efficiency, reduce waste, and enhance adaptability to changing market demands. This strategic investment not only improves operational efficiency but also positions companies to swiftly adapt to market shifts.
  3. Diversification: Diversifying product offerings can mitigate risks associated with the housing market’s cyclical nature. Exploring opportunities in commercial construction or renovation sectors may provide more stable demand during residential market downturns.

Policy Impact: Government policies are set to significantly influence the construction industry. Forthcoming initiatives aimed at promoting affordable housing or sustainable building practices are expected to spur demand for specific wood products, such as certified sustainable wood or innovative materials like cross-laminated timber. Staying abreast of these policies and participating in industry advocacy can help businesses align themselves with emerging trends and influence policy decisions that affect the sector.

The future of the housing market and its impact on the secondary wood manufacturing industry hinges on a complex interplay of market forces and policy decisions. By strategically adapting operations, investing in technology, and diversifying product lines, companies can not only survive but thrive in this evolving landscape. Keeping a close eye on government policies and economic indicators will also be essential for timely and effective strategic planning.

Tyler Holt is the Editor of Wood Industry / Le monde du bois magazine. He has a master’s degree in literature and publication, and years of experience in the publishing and digital media industry. His main area of study is the effect of digital technologies on industrial and networked production.

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