Across Canada, the total housing starts/ standalone monthly adjusted annual rate (SAAR) declined by 11% in March alone (213,865 units) compared to February (240,927 units) according to Canada Mortgage and Housing Corporation (CMHC). CMHC provides unbiased housing data, research and information to the public to offer a deeper understanding into Canada’s complicated housing crisis and to ensure Canadians stay informed on future policy decisions.
In March, the monthly SAAR of total urban housing starts (centres 10,000 population and over) dipped by 12% (192,545 units). Multi-unit starts decreased by 11% (151,769 units) in March while single-detached housing starts lowered by 16% (40,776 units). Vancouver was the only city among Toronto and Montreal to record a rise in total SAAR starts in March. In fact, Vancouver housing starts were up 98% due to double multi-unit starts built compared to February. Whereas, Montreal saw a start decline by 12% and Toronto decrease 26%.
“Despite the national decline in March, the SAAR of housing starts and the trend appear to be returning to pre-pandemic levels. With interest rates remaining high, it continues to be challenging for developers and homebuilders to get projects started. We will need to find innovative ways to deliver more housing supply to keep up with demand and ultimately improve affordability,” said Bob Dugan, CHMC’s chief economist.
Housing Starts at Weakest Place Since Pandemic
Throughout the past five years, housing starts have instability and unpredictability. The onset of the COVID-19 pandemic negatively hindered housing starts at the end of the Q1 and during the Q2 as economic uncertainty lingers on and is delaying construction projects. Lower interest rates, as a result of the pandemic, prompted an increase in residential construction.
However, in other areas, inflation has risen to record-high levels with the Bank of Canada raising its policy rate from 0.25% in March 2022 to 4.25% in December 2022, a dramatic leap. Inflation continues to linger well into 2023 with rates remaining high, which has led to housing starts dropping an additional 14.3% overall during the year. Yet, IBISWorld projects the number of housing starts will begin to increase annually by 1.1% over the five years to 2023.