As we look to see if residential construction activity is picking up in response to population growth, new August data from Statistics Canada on building permits provides some clues.

Using a three-month moving average to smooth out month-to-month volatility, the value of residential building permits issued in Alberta has been on the rise since June. Housing starts also rose during the summer, exceeding 38,000 in both July and August  (seasonally adjusted at annualized rates).

The uptick in permits is evident even when inflation in the construction sector is taken into account with the real value of residential permits also growing over the summer (see the chart below).

On a year-to-date YTD basis, however, residential intentions were down by 11.3% in current dollars  and by 14.2% after removing the effects of inflation.

The YTD trends reflect the spike in intentions last year in anticipation of rising interest rates and the concomitant drop in permit value under the weight of higher borrowing costs and the skilled labour shortages that have been reported by builders.

We will have to wait for more data before we can tell if this summer’s upswing will be durable. Based on our September outlook, we expect annual housing starts to rise next year to 38,000 from an estimated 32,400 in 2023.

Answer to the previous trivia question: According to its website, 190 countries belong to the International Monetary Fund.

Today’s trivia question: What is being afraid of Friday the 13th called?