The Canada Mortgage and Housing Corp. (CMHC) reports that the construction of new homes in Canada increased in several major cities last year. The national housing agency’s annual housing supply report, released on Wednesday, showed mixed growth in residential construction across six key areas in 2022, but the majority saw an increase in housing starts. Toronto, Calgary, Edmonton, and Ottawa saw a rise in housing starts, with Toronto’s number increasing by 7.7% to reach its highest level since 2012. However, Vancouver saw no change, and Montreal saw a decrease in housing starts.
The report also highlights that the construction industry could face challenges ahead due to higher interest rates affecting building costs. Francis Cortellino, senior specialist for housing market analysis at CMHC, explained that “in some centres, seasonally adjusted housing starts began moving lower at the end of 2022 and early 2023, and the higher interest rate environment will likely slow construction activity in more centres in 2023.”
Despite the COVID-19 pandemic triggering more construction, the inventory of new and unabsorbed homes (homes that are done being built but not yet sold) is currently at historic lows. This could make it harder for people to access housing. The report warns that this situation could worsen in the future.
The CMHC published monthly housing start numbers on the same day as the report, showing that the annual pace of housing starts in March fell by 11% compared with February. The seasonally adjusted annual rate of housing starts in March was 213,865 units, down from 240,927 in February. Urban starts in the month fell by 12% to 192,545 units, with the annual rate of multi-unit urban starts falling by 11% to 151,769 for March. The pace of single-detached urban starts fell by 16% to 40,776. The annual rate of rural starts was estimated at 21,320 units for the month.
In summary, the CMHC’s report shows that while construction of new homes increased in some major cities last year, the higher interest rate environment is expected to slow down construction activity in more areas this year. Additionally, while the demand for housing remains high, inventories of new and unabsorbed homes are currently at historic lows, making it harder for people to access housing.
