New Home Starts Drop by 7 Percent Across Canada, Missing Target for Housing Affordability

Canada’s New Home Starts Fall by 7 Percent, Failing to Meet Housing Affordability Goals

January 22, 2024 TruthUSA

National housing starts have experienced a seven percent decline over the past year, according to a recent report by the Canada Mortgage and Housing Corporation (CMHC).

The drop is significant in the context of Housing Minister Sean Fraser’s commitment to accelerate the pace of home construction, as first covered by Blacklock’s Reporter.

Data shows a reduction in housing starts in urban areas with populations exceeding 10,000, dropping from 240,590 to 223,513. The decline encompasses various types of new construction, including condominiums and apartments. Particularly notable is the 25 percent decrease in the construction of single detached homes.

The latest figures follow Mr. Fraser’s Jan. 22 comments to reporters during a three-day cabinet meeting, during which he emphasized the importance of new construction for housing affordability and underscored the relationship between population growth and housing market dynamics.

“We need to build the housing to accommodate that population growth,” he said during a Jan. 15 press conference.

“I don’t think anybody needs a briefing note to understand that having more people in the housing market impacts the housing market.”

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Data from the CMHC indicates a significant year-over-year decline in housing starts across several major cities. Calgary leads the trend with a 51 percent reduction, followed by Quebec City with a 40 percent decrease. Other cities experiencing notable declines include Montreal with a 37 percent drop, St. John’s (33 percent), Fredericton (23 percent), Ottawa (20 percent), and Kelowna, down 12 percent.

Additionally, Saint John saw an 11 percent decrease, Edmonton experienced a 10 percent fall, and Winnipeg’s housing starts declined by seven percent.

In 2022, the CMHC published a report, “Canada’s Housing Supply Shortages: Estimating What Is Needed to Solve Canada’s Housing Affordability Crisis by 2030,” setting a target of 3.5 million new homes by 2030. Meeting the goal will require the unprecedented construction of 741,000 homes annually until the end of the decade to restore housing affordability.

However, Romy Bowers, CEO of CMHC, expressed concerns during testimony to the Senate national finance committee on Dec. 5. Ms. Bowers said there is currently no strategic plan in place to meet such an ambitious target, citing various factors that influence housing production.

“There are many factors that contribute to housing production, including things like interest rate trajectories, the availability of skilled labour, local conditions that really impact housing delivery,” said Ms. Bowers.

The lack of a definitive plan was further highlighted during an exchange with Senator Elizabeth Marshall, where Ms. Bowers acknowledged the absence of a concrete strategy but said that it is in development.

Statistics Canada reported a marginal decrease in the price of new homes in November.

Canada’s national average home price saw a reduction of 0.2 percent, with the most significant declines observed in Sherbrooke, Que. (1.2 percent), St. John’s, Newfoundland (1 percent), and Hamilton, Ontario (1 percent). Builders in those regions attributed the decrease in prices to sluggish market conditions, according to Statistics Canada.

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