Keywords: housing

Canadian housing starts surged 10.8% to 299,589 annualized units in September, from an upwardly revised 270,397 annualized units in August. This marks the highest number of starts since last November and pushed the six-month moving average up 3.3% to 276,682 units. The increase was entirely due to the volatile urban multi-unit segment, which rose 16.1% after posting a 4.5% decline in August. Meantime, urban single-family homes edged down 0.4%.

The regional picture was mixed with Ontario (+35%, to its highest level since the regional series began in 1990) and B.C. (+11%) leading the gains. Again, the increase was largely thanks to multi-unit starts, which rose in Montreal, Toronto, and Vancouver. On the other side of the ledger, a 31% drop in the Atlantic provinces and a 15% decline in Quebec dampened the national gain. Hurricane Fiona, which hit the Atlantic provinces at the end of the month, could continue to weigh on the region in October.

The high number of starts in September is another reminder that the residential construction sector continues to hold up. However, a continued decline in sales of existing homes suggests that we could see construction pullback later in the coming months.

Bottom Line: Housing starts surged in September though the gains came from the volatile multi-unit segment. Looking ahead, we expect starts, which lag resale activity, to begin cooling at the end of the year and into 2023, consistent with the broader decline in the housing market.