Housing starts activity remained high in 2022 and December trended slightly lower

The standalone monthly seasonally adjusted annual rate (SAAR) of total housing starts for all areas in Canada declined five per cent in December (248,625 units) compared to November (263,022 units) according to a Canada Mortgage and Housing Corporation (CMHC) report released on Tuesday.

The SAAR of total urban starts also declined five per cent, with 227,708 units recorded in December. Multi-unit urban starts decreased four per cent to 182,850 units, while single-detached urban starts fell 11 per cent to 44,858 units. Rural starts were estimated at a seasonally adjusted annual rate of 20,917 units, added the federal agency.

The trend in housing starts was 269,930 units in December, down one per cent from 273,801 units in November. This trend measure is a six-month moving average of the monthly SAAR of housing starts, it said.

“The 2022 year ended with a slight decline for both the monthly SAAR of housing starts and the trend at the national level in December; however, Toronto, Montreal, and Vancouver all posted increases in total SAAR housing starts, with Toronto posting a significant increase of 72 per cent in December. The rate of new construction continued at an elevated pace in 2022 overall, ending the year with actual total urban starts at 240,590 units (-one per cent) in Canada, similar to levels observed in 2021 (244,141 units). While these additional units will provide much needed supply on the market, demand for housing in the country will continue to grow. We need to find innovative ways to deliver more housing supply and keep building at a higher pace in the coming years in order to improve affordability,” said Bob Dugan, CMHC’s Chief Economist.

Rishi Sondhi, Economist with TD Economics, said like clockwork, housing starts continue to trend at healthy levels roughly 30 per cent above their pre-pandemic run-rate.

“Homebuilding is being buoyed by low inventory levels and past sales gains. However, it’s only a matter of time before weaker demand conditions that have persisted since early 2022 begin to materially impact homebuilding. We are forecasting a notable slowdown in housing starts, both this year and in 2024. Note that building permits (while still remaining elevated) are down significantly since the third quarter of last year,” said Sondhi.

(Mario Toneguzzi is Managing Editor of Canada’s Podcast. He has more than 40 years of experience as a daily newspaper writer, columnist, and editor. He worked for 35 years at the Calgary Herald, covering sports, crime, politics, health, faith, city and breaking news, and business. He works as well as a freelance writer for several national publications and as a consultant in communications and media relations/training. Mario was named in 2021 as one of the Top 10 Business Journalists in the World by PR News – the only Canadian to make the list)