Home construction activity took a step back in March
Higher interest rates are taking a bite out of housing starts
By Siddhartha Bhattacharya, ATB Economics 21 April 2023 1 min read
After spiking to a seven-year high in 2022, Alberta’s housing starts* have slowed so far this year.
Driven by weakness in both single-detached and multi-unit home construction, housing starts declined by 13.1% to 26,686 units (seasonally adjusted at an annual rate or SAAR) in March—the lowest level in fourteen months.
At 28,005 units (SAAR) in the first quarter of 2023, housing starts in Alberta were down by 5.5% from the same period last year and were almost a third lower than the multi-year peak reached in the second quarter of 2022.
Alberta is not alone when it comes to the slowdown in housing starts. Six other provinces posted lower starts in the first quarter of 2023 on a year-to-date basis with Newfoundland and Labrador experiencing the largest pullback at -51.7%.
Ontario managed a slight increase at 2.2% while starts picked up steam in Saskatchewan (+31.9%) and British Columbia (+30.0%).
Nationally, housing starts through March were down by 6.8% over the first three months of 2023.
The future trajectory of housing starts in Alberta is being pulled in two different directions. On the one hand, higher interest rates are having a negative impact on construction intentions. On the other hand, relatively low inventory in the resale market and population growth are working in the opposite direction. Our current expectation is that housing starts in the province will be lower than last year, but remain relatively strong.
*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.
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