CMHC reports annual pace of housing starts slowed in February

Economists had expected an annual pace of 205,000

The annual pace of housing starts slowed in February as higher mortgage rates and less stimulative economic conditions helped soften demand, Canada Mortgage and Housing Corp. said Friday.

The housing agency said the seasonally adjusted annual rate of housing starts fell to 173,153 units in February compared with 206,809 units the month before.

Economists had expected an annual pace of 205,000, according to Thomson Reuters Eikon.

“As a leading indicator of economic activity, February’s steep decline in housing starts may raise some eyebrows in Ottawa,” Fotios Raptis, senior economist at TD Bank, wrote in a report.

“Although housing starts seemed to be unscathed by the new B-20 regulations that took effect in January 2018, higher borrowing costs and tougher mortgage qualifying conditions may finally be taking a toll on new residential construction.”

The slowing housing starts come as sales of existing homes has also been slowing. The Canadian Real Estate Association reported home sales posted their weakest January since 2015.

Rising mortgage rates and tighter lending rules have been blamed for the slowdown in sales, prompting some to call on the federal government to make changes in the upcoming federal budget to help first-time homebuyers.

CIBC economist Royce Mendes said 2019 is shaping up to be a tougher year for homebuilding.

READ MORE: CMHC sets target to make housing affordable for every Canadian by 2030

“Residential investment was downright ugly in the fourth quarter, and the latest reading on housing starts only added to the bad news on Canadian homebuilding,” Mendes wrote.

“Prior to this reading, starts had seen a bit of a renaissance, rising back above 200,000 for four straight months. But the market has been a contending with the effects of higher interest rates and stricter lending standards, and a pace of 200,000 looked unlikely for the year as a whole.”

The overall decline in the pace of housing starts came as the annual rate of urban starts fell 18.0 per cent in February to 155,663 units.

The pace of urban multiple-unit projects such as condominiums, apartments and townhouses fell 20.2 per cent to 116,284 units, while single-detached urban starts dropped 10.6 per cent to 39,379 units.

Rural starts were estimated at a seasonally adjusted annual rate of 17,490 units.

The six-month moving average of the monthly seasonally adjusted annual rates of housing starts was 203,554 in February, down from 207,742 in January.

The Canadian Press

Like us on Facebook and follow us on Twitter.

Just Posted

Harrison Festival fundraiser dance to have ’70s theme and features Chilliwack band

Chilliwack band The Vacationers to perform at May 31 Harrison Festival Society’s fundraising concert

Seabird Island opens 50th annual festival

The weekend festival will see First Nations teams compete in soccer, three-pitch and canoe races

Lofty plans for Chilliwack school district revealed

Chilliwack school district draws up plan to add 2,900 student seats in five years

Agassiz study to look at drone use for pesticide application

The study will be the first in Canada to use drones to apply pesticides to farm fields

Chilliwack’s pediatric observation unit gets financial shot from trades workers

Unions and contractors donate more than $30,000 to Fraser Valley Health Care Foundation

REPLAY: The best videos from across B.C. this week

In case you missed it, here’s a look at the replay-worth highlights from this week in the province

UN urges Canada to take more vulnerable Mexican migrants from Central America

The request comes as the United States takes a harder line on its Mexican border

Mistrial declared in Jamie Bacon murder plot trial

Bacon was on trial for counselling to commit the murder of Person X

B.C. VIEWS: Money-laundering melodrama made for TV

Public inquiry staged to point fingers before 2021 election

Canadian homebuyers escaping high housing costs by moving to secondary cities

In British Columbia, exurbs have grown in the Hope Valley and Kamloops

Feds lay out proposed new rules for voice, video recorders in locomotives

Transport Canada wants to limit use of recorders to if a crew’s actions led to a crash

Raptors beat Bucks 100-94 to advance to franchise’s first-ever NBA Finals

Leonard has 27 points, 17 boards to lead Toronto past Milwaukee

Third person charged in death of B.C. teen found in torched SUV

Inderdeep Kaur Deo facing charge of accessory after the fact to murder

Kamloops girl, 9, recovering from carbon monoxide poisoning now out of ICU

Her mother who was sleeping in the same tent with her did not survive

Most Read