Housing starts down in March, CMHC says

A slowdown in the construction of multi-unit buildings helped push the overall trend for housing starts in Canada lower last month, according to Canada Mortgage and Housing Corp.

The federal housing agency said Friday that the seasonally-adjusted annual rate of starts for all areas the country was 204,251 units in March, down from 219,077 units in February.

Despite the slowdown, starts still exceeded the expectations of economists. Thomson Reuters said economists had been projecting an annual pace of 190,000 for March.

CMHC said the six-month moving average — which smoothes out monthly blips — for starts was 196,783 units in March compared to 201,618 in February.

"Homebuilding activity is holding at a firm level nationally, but the major disparities persist at the regional level," said   Robert Kavcic, Senior Economist BMO Capital Markets.

Ontario and B.C. lead the pack

TD Economics said the annual rate of starts in Ontario is up 44 per cent over last year, while B.C. is up almost 30 per cent. Meanwhile, the Prairies saw weak performance, with Alberta, Saskatchewan and Manitoba off 55.9 per cent, 13.3 per cent and 24.3 per cent year-over-year in March, respectively.

Warren Kirkland, an economist at TD, said Ontario and B.C. are expected to continue to see strong gains in housing construction as tight real estate markets encourage spending on new supply.

"Construction activity is likely to be a drag on growth in provinces that are experiencing both a deterioration in economic conditions and a housing market downturn, including Alberta and Saskatchewan," Kirkland said. 

"Everyone else will be somewhere in the middle, where low rates will help drive a modest uptick in housing demand, but a still elevated level of inventory of homes for sale may constrain construction activity," he said.