What do July's CMHC Housing Starts Mean?

What do July’s CMHC Housing Starts Mean?

The national housing starts trendline increased for the second consecutive month in July, reports the Canada Mortgage and Housing Corporation (CMHC). The total of 242,525 units was up 2.8% from June’s 235,819 units. The trend measure is a six-month moving average of the monthly seasonally adjusted annual rate (SAAR) of total housing starts for all areas in Canada.

The stand-alone monthly SAAR of total housing starts for all areas in Canada, however, decreased 10% in July (254,966 units) compared to June (283,498 units), which was the strongest month so far this year.

“Despite a decrease in the SAAR of housing starts relative to last month, July saw a healthy number of actual housings starts from a historical perspective (7.4% above the 5-year average),” noted Bob Dugan, CMHC’s Chief Economist “Market intelligence suggests multi-unit projects started in June and July were likely financed a few months prior, so the effect of the most recent interest rate hikes on housing starts remains to be seen.”

The monthly SAAR of total urban starts (populations of 10,000 and over) decreased by 11%, with 234,857 units recorded in July. Multi-unit urban starts decreased 12% to 193,446 units, while single-detached urban starts decreased 4% to 41,411 units.

The Vancouver and Toronto CMAs saw decreases in total SAAR housing starts in July, with Vancouver down 23%, and Toronto down 29%. That said, both cities have been performing well this year compared to last. Actual 2023 year-to-date housing starts were 35% and 49% higher than the same period in 2022 in Toronto and Vancouver, respectively.

CMHC uses the trend measure as a complement to the monthly SAAR of housing starts to account for considerable swings in monthly estimates, obtaining a clearer picture of upcoming new housing supply. Analyzing only SAAR data can sometimes be misleading, as the multi-unit segment largely drives the market and can vary significantly from one month to the next.