CA: Housing Starts

Tue Apr 10 07:15:00 CDT 2018

Consensus Actual Previous
Level 217,000AR 225,213AR 229,737AR

March housing starts declined to an annualized rate of 225,213 units, down from 231,026 units in February. Urban starts decreased by 2.8 percent to an annualized pace of 208,237 units. Multiple urban starts decreased by 7.3 percent to 144,578 units while single-detached urban starts increased by 9.5 percent to 63,659 units. Rural starts were estimated at a seasonally adjusted annual rate of 16,976 units.

The trend in housing starts was 226,842 units in March 2018, compared to 225,804 units in February. This trend measure is a six-month moving average of the monthly seasonally adjusted annual rates (SAAR) of housing starts.

Starts were up in Vancouver while they continued to trend lower in Edmonton due in part to a declining trend in multi-family construction where inventory levels remain elevated. In Toronto, starts trended up to reach a seven month high during March.

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.

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.