CMHC Reports a Seven Percent Decrease in Housing Starts in March Compared to February

According to Canada Mortgage and Housing Corp., the annual rate of housing starts in March decreased by seven percent compared to February.

The adjusted annual rate of housing starts in March was 242,195 units, down from 260,047 units in February.

In terms of year-over-year comparisons, large urban centres saw a 16 percent increase in housing starts to 17,052 units last month, up from 14,756 units in March 2023. This rise was led by a 19 percent increase in multi-unit starts and a two percent increase in single-detached starts.

Toronto had a 10 percent increase in housing starts, while Vancouver saw a 15 percent increase year-over-year due to more multi-unit starts. Montreal, on the other hand, experienced a one percent decrease in actual starts, primarily due to fewer multi-unit starts.

The estimated annual rate of rural starts was 21,452 units.

Despite the month-over-month decline in March, TD economist Rishi Sondhi mentioned that housing starts are still trending solidly, supported by high prices and strong pre-construction sales in recent times.

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Sondhi warned of potential further decreases in housing starts in the upcoming months despite current solid trends due to recent declines in pre-sales activity.

Monthly starts can vary significantly due to the launch of larger multi-unit projects, affecting overall numbers. Adjusted starts in March showed a 27 percent increase in Vancouver, while Toronto and Montreal decreased by 26 percent and five percent respectively, mainly due to fewer multi-unit starts.

To provide a clearer trend in housing supply, CMHC also reports a six-month moving average of the adjusted rate, which in March stood at 243,957, down 1.6 percent from February.

Desjardins economist Kari Norman explained that the slight decline in multi-unit housing starts in March is likely due to the volatile nature of such large projects month-to-month.

Looking ahead, the expected gradual reduction in interest rates starting in June may bring cautious optimism to housing starts. However, challenges like construction labor shortages, rising building material costs, and weaker homebuilder sentiment could potentially slow down the positive momentum seen earlier in 2024 despite favorable monetary policy changes.