Overall housing starts decreased by almost seven per cent in August to 180,291 units, with multiple-unit dwellings in urban areas seeing the biggest drop, at 8.4 per cent, Canada Mortgage and Housing Corporation said Tuesday. Starts of single-detached homes were down just shy of one per cent to 58,398 units.
Overall starts were down 21 per cent from last August.
Those numbers are the monthly seasonally adjusted rates, but when measured as a six-month moving average, the August decline was slightly smaller — with 187,197 units started in August versus 187,324 in July. CMHC uses the six-month average as a more accurate measure for some markets as the standalone monthly data can be skewed by the sometimes large month-to-month fluctuations in the multiple-unit dwellings category, the housing agency said.
"The trend in total housing starts continued to be relatively stable for a sixth consecutive month, remaining within a narrow range of roughly 182,000 to 188,000 units since March 2013. This is in line with our forecasts," said Mathieu Laberge, deputy chief economist at CMHC.
Starts up in Ontario
Starts were down in all regions except Ontario, where they were up 14 per cent, and Atlantic Canada, where they "held steady," according to the CMHC
The Prairies were down 21 per cent, B.C. was down 18 per cent, Quebec declined nine per cent and Atlantic Canada was down seven per cent.
Alberta accounted for the bulk of the drop in the Prairies, which BMO economist Benjamin Reitzes suggests could be because the clean up from the devastating floods in late July diverted resources away from new home construction.
"Canada's housing market remains in good shape despite the larger-than-expected decline in August housing starts," Reitzes said in a commentary.
"Indeed, through the first eight months of 2013 starts are averaging 183,200, essentially right on demographic demand.
"Building permits have also remained healthy in recent months, hinting at some near-term upside for starts."
On Monday, Statistics Canada reported that contractors took out $8 billion worth of building permits in August, an increase in value of 21 per cent over July.
Reitzes said that higher mortgage rates will restrain housing sector activity in the second half of 2013, but it seems the industry is headed for a "soft landing" — rather than a major downturn that some observers had predicted.