CMHC: Toronto housing starts fell by 47% in October

The recent report by Canada Mortgage and Housing Corporation (CMHC) says the pace of Canadian housing starts slowed by 11% to 267,055 units last month, offsetting the September hike of 298,811 units. The largest drop by 47% was seen in Toronto.

According to CMHC, the total urban starts were down by 11% on a seasonally adjusted basis to 245,234 in October from 276,142 in September. Meanwhile, multi-unit urban starts fell by 13% to 188,189 units following 216,549 units reported in September. Urban starts of single-detached houses showed a 4% decrease to 57,045 from 59,593 units in September.

However, last month’s drop varied depending on regions and housing types.

For instance, Montreal reported a 19% increase driven by multi-unit activity, while Vancouver saw a 19% decline, restraining the national average number.

Toronto starts fell by as much as 47%, with the largest decrease seen in the sector of multi-family houses (52%). Many other Ontario markets reported similar drops in multi-family segment, including Guelph with an 85% decline and Barrie with a decrease by 91%.

According to CMHC economist Dana Senagama, the all-or-nothing aspect of multi-family housing projects can push the numbers up sharply at any moment.

“We can see that fewer projects are starting construction, specially in 2022,” – Senagama said, pointing to the fact that both potential homeowners and developers searching for funds to start construction can be affected. “We’re also noticing a lot of issues associated with labour and/or the lack of it.”

One homebuilder group expects the starts to keep falling as higher interest rates are already affecting the sector.

Canadian Home Builders’ Association CEO Kevin Lee says the central bank’s rate-hike cycle has caused significant decline in builder sentiment during the second and third quarters of this year.

“We knew it would be around now that we would see this decline in housing,” – he added. “We believe the starts will continue to go down next year as well.”