September slow month for Alberta homebuilders

Total starts across the province were down 24%; across Canada, starts fell by 11%

Mario ToneguzziSeptember was a slow month for homebuilders across Alberta, particularly in Calgary and Edmonton.

Data released on Tuesday by Canada Mortgage and Housing Corp. said total housing starts for the month in the Calgary census metropolitan area fell by nine per cent year over year to 834 units while they dipped by 45 per cent year over year to 597 units in the Edmonton census metropolitan area.

For the province, in centres with populations more than 10,000, total starts were down 24 per cent from a year ago to 1,826.

In Calgary, new home construction fell by 40 per cent in the single-detached market to 280 units while all other housing starts rose by 23 per cent to 554 units.

In Edmonton, single-detached starts were off by 18 per cent to 370 and all other starts plunged by 64 per cent to 227.

Alberta saw single-detached starts drop by 27 per cent to 877 and all other housing categories fall by 20 per cent to 949.

In Canada, in centres with populations more than 10,000, total starts fell by 11 per cent to 16,735, which included a 21 per cent decline in single-detached homes to 5,025 units and a decrease of six per cent in all other categories to 11,710.

The CMHC said the trend in housing starts was 207,768 units in September 2018, compared to 213,966 units in August 2018. The trend measure is a six-month moving average of the monthly seasonally-adjusted annual rates of housing starts.

Bob Dugan
Bob Dugan

“The national trend in housing starts stood at a 19-month low in September, following declines in four of the last five months,” said Bob Dugan, CMHC’s chief economist. “The slowdown in the pace of new residential construction activity in recent months is a result of both lower single-detached and multi-starts activity and brings new residential construction closer to its long-run average from the elevated levels registered in 2017.”

Royce Mendes, an economist with CIBC Economics, said housing starts took a tumble in Canada for the third month in a row and it was the slowest reading since late 2016 “and a far cry from the 245,000 pace seen as recently as June.”

“Most of the declines focused in Alberta and B.C., the latter of which has seen a stark in turn in overall housing activity recently. The slowdown in building has coincided with moves toward more restrictive mortgage rules and higher interest rates, and is in line with our below-consensus outlook for housing starts over the second half of 2018. As these forces continue to weigh on the housing market, we see residential investment turning from a boost to a drag on GDP in 2019,” said Mendes.

Mario Toneguzzi is a veteran Calgary-based journalist who worked for 35 years for the Calgary Herald, including 12 years as a senior business writer.

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