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More evidence of a residential construction slowdown

More evidence of a residential construction slowdown

Posted on: 2/8/2018 | Author: ATB Financial's Economics + Research Team

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The latest building permit data shows a slowing construction sector in our province. As reported in yesterday's Owl, Alberta’s housing sector has been a key driver for the construction industry, but that segment of the industry is set to slow this year. Today’s Owl reveals another important indicator that points to a slowdown in residential construction.

That indicator is the number of completed, but unabsorbed houses in our province. In Calgary, 635 new homes sat vacant with no binding agreement made to buy or sell at the end of last year. As of December, vacant housing in Calgary was 19 per cent higher than during the same month a year earlier. In fact, December’s total reached the second highest level of vacant housing of 2017 since December 2011. What’s more is that inventory rose at an average rate of 22 per cent last year.

After months of moderation in Edmonton, the level of unabsorbed housing in Alberta’s capital city is rising again. In December, the number of vacant homes in Edmonton had grown 13 per cent from the beginning of the year.

As Alberta continues its economic recovery, the number of unabsorbed houses is expected to push higher. Given the higher levels of unemployment in the province, lower interprovincial migration to Alberta, rising interest rates and mounting household debt levels, demand for housing will fall and slow housing construction across Alberta.​

Unabsorbed housing, Alberta, graph​ ​​

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