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Housing starts skyrocketed 21.6% month over month (m/m) in
March after the 11.7% m/m decrease in the previous month.
Urban multifamily starts soared 33.8% m/m to an all-time high
while single starts jumped 3.6% m/m, reaching the highest level
since April 2010. Rural starts increased 2.0% m/m.
The overall gain was largely concentrated in Ontario (up 45.0%
m/m) and British Columbia (up 57.4% m/m) as starts in both
provinces hit a record high.
Previous months' housing starts were revised up in February (up
by 29,645 units to 275,567 units) and January (up by 27,857 units
to 312,229 units), led by the strong revision in rural starts.
Stronger-than-expected homebuilding activities in the first
quarter support our forecast that real business investment in
residential structures will contribute the most to first-quarter
real GDP growth.
Other than strong increases in Ontario and British Columbia,
starts increased solidly in Saskatchewan, Alberta, and Newfoundland
and Labrador. Meanwhile, starts in Quebec and Manitoba declined for
the second consecutive month following the surge in January. After
two months of starts surpassing Ontario's level, Quebec's housing
starts slid below Ontario's while remaining at a strong level.
Starts in Atlantic Canada continued its four-month losing streak,
mainly because of the sharp decreases in New Brunswick and Nova
Scotia.
January and February's starts were substantially revised up.
While the upward revisions were widely spread across Canada, except
for New Brunswick, the upgrades in Quebec (up by an average of
12,117 units over the previous two months) and Ontario's housing
starts were relatively stronger than those in other provinces. With
substantial revisions and strong March results, first-quarter
housing starts soared 28.4% quarter over quarter (q/q) to 307,665
units, reaching its historical high. The strong jump in the first
quarter was widespread in urban single (up 36.8% q/q), urban
multiple (up 20.3% q/q), and rural (up 67.5% q/q) starts. On a
quarterly basis, Quebec, Ontario, and British Columbia led the
overall growth while starts in Alberta, Manitoba, Nova Scotia, and
New Brunswick decreased.
Reflecting strong existing housing demand and lean supply, new
home building activities surged in March and in the first quarter,
helping increase new home supply in the long term. Given the much
stronger-than-expected housing starts results in the first quarter
indicating strong residential building intentions on current hot
housing demand, the housing starts forecast will be revised up in
the May Canadian macro forecast. As a result, real business
investment growth in new residential construction will likely be
more robust than the current forecast in the quarter. Overall real
residential structure investment growth will strongly advance in
2021 as the healthy momentum will flow into the remaining quarters
in 2021, supported by the low-interest environment.
Posted 28 April 2021 by Chulwoo Hong, Sr. Economist
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May 06
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