August housing starts fall below expectations

Canada Mortgage and Housing Corp. says the pace of housing construction starts slowed in August compared with July.

The agency says the seasonally adjusted annual rate of housing starts was 200,986 units in August, down from 205,751 units in July.

Economists had expected an annual pace of 210,300 starts for August, according to Thomson Reuters Eikon.

The decrease came as the annual pace of urban starts fell 2.5% to 184,925 units. Starts of urban multiple-unit projects such as condos, apartments and townhouses fell 2.4% to 132,700 units in August while single-detached urban starts fell 2.6% to 52,225 units.

Rural starts were estimated at a seasonally adjusted annual rate of 16,061 units.

CMHC says the six-month trend for housing starts was 214,598 units in August, down from 219,656 in July.

“The national trend in housing starts continued to decline in August from the historical peak that was recorded in March 2018,” CMHC chief economist Bob Dugan said.

“This moderation brings total starts closer to historical averages, largely reflecting recent declines in the trend of multi-unit starts from historically elevated levels earlier in the year.”

The pace of housing starts is another sign that Q3 GDP growth will be slower than Q2, said Royce Mendes, chief economist at CIBC, in a research note. The slower pace also fits his expectations that higher interest rates and tighter mortgage rules “will turn this former stalwart of growth into a drag on the economy.”

Staff, with files from The Canadian Press

The Canadian Press is a national news agency headquartered in Toronto and founded in 1917.