CA: Housing Starts


Tue May 08 07:15:00 CDT 2018

Consensus Actual Previous
Level 220,000AR 214,379AR 225,213AR

Highlights
April housing starts were an annualized rate of 214,379, down from 225,459 units in March. The SAAR of urban starts declined 4.7 percent to 198,090 units. Multiple urban starts were down 2.7 percent to 141,032 units while single-detached urban starts dropped 9.3 percent to 57,058 units. Expectations had been for an overall increase of 220,000.

CMHC uses the trend measure as a complement to the monthly SAAR of housing starts to account for considerable swings in monthly estimates. The trend in housing starts was 225,696 units in April, compared to 226,942 units in March. This trend measure is a six-month moving average of the monthly seasonally adjusted annual rates (SAAR) of housing starts.

According to CMHC, the national trend in housing starts remained stable at historically elevated levels, with lower starts of single-detached dwellings offsetting higher starts of multi-unit dwellings.

Definition
Released by the Canada Mortgage and Housing Corporation (CMHC), the monthly housing starts data capture the annualised number of new residential buildings that began construction during the previous month. Statistics are provided for urban and rural areas, the former with a population of at least 10,000. CMHC estimates the level of starts in centres with a population of less than 10,000 for each of the three months of the quarter, at the beginning of each quarter. During the last month of the quarter, a survey of these centres is conducted and the estimate revised.

Description
Housing starts are a leading indicator of economic health because building construction produces a wide-reaching ripple effect. This narrow piece of data has a powerful multiplier effect through the economy, and therefore across the markets and your investments. Home builders usually don't start a house unless they are fairly confident it will sell upon or before its completion. Changes in the rate of housing starts tell us a lot about demand for homes and the outlook for the construction industry. Furthermore, each time a new home is started, construction employment rises, and income will be pumped back into the economy.

Once the home is sold, it generates revenues for the home builder and a myriad of consumption opportunities for the buyer. Refrigerators, washers and dryers, furniture, and landscaping are just a few things new home buyers might spend money on, so the economic "ripple effect" can be substantial. Since the economic backdrop is the most pervasive influence on financial markets, housing starts have a direct bearing on stocks, bonds and commodities. In a more specific sense, trends in the housing starts data carry valuable clues for the stocks of home builders, mortgage lenders, and home furnishings companies. Commodity prices such as lumber are also very sensitive to housing industry trends.