Best six months for housing starts in a decade
By Siddhartha Bhattacharya, ATB Economics 18 January 2024 1 min read
Alberta housing starts* made a big splash to finish the year with 44,300 units (seasonally-adjusted at an annual rate) in December 2023, lifted by gains in Edmonton.
After a sluggish first half, starts swiftly gained (and retained) momentum in the second half. They averaged 42,700 units between July and December—the highest average for a six-month period since 2014.
Alberta’s performance is even more impressive when compared with the national economy, where starts over the second half of 2023 were down by 7.2% compared to the same period in 2022.
For the full year, starts in Alberta came in at 36,000 units, shy of the 36,500 units in 2022 due to weakness in the first half. This was a bit more optimistic than what we expected in our December outlook.
The annual 1.4% decline was entirely driven by a pullback in single-detached homes (-13%) which outweighed increases in multi-family units (+6.5%).
Seven out of ten provinces posted declines in starts in 2023, led by Quebec and Newfoundland & Labrador. With monthly starts down in seven out of twelve months last year, Canadian starts retreated by 8.2% in 2023—the starkest retreat witnessed in a decade, as higher interest rates weighed.
Looking ahead, we expect healthy migration levels to continue to boost housing demand in Alberta in 2024 despite the headwinds of higher borrowing costs and staffing challenges in the construction sector.
*A housing start is defined as the beginning of construction work on the building where the dwelling unit will be located. This can be described in two ways: 1) the stage when the concrete has been poured for the whole of the footing around the structure; or 2) an equivalent stage where a basement will not be part of the structure.
Answer to the previous trivia question: The song “Our House” by the English band Madness was released in 1982.
Today’s trivia question: In what year was the name of the “house” (a.k.a. dynasty) of the British Royal Family changed from the House of Saxe-Coburg-Gotha to the House of Windsor?