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Housing construction pulls back at year-end

Housing construction pulls back at year-end

Posted on: 1/9/2018 | Author: ATB Financial's Economics + Research Team

Home builders in Alberta had a good year in 2017, particularly given the fact that the economy was crawling out from under two years of recession. A nice rebound in housing starts marked the beginning of the year. However as the year drew to a close, home builders pulled back.

In December, construction began on 23,104 new homes, including both single detached and multi-unit homes. (This figure is adjusted for seasonality and expressed at annualized rates, meaning the number of new homes that would be built in a full year if the same pace were to continue for 12 months). That’s one-third lower than November.

Still, December’s pull-back is only one month. A better way to consider housing construction is over a longer period. Through the entire year, home builders started work on just over 29,300 new homes. That’s an improvement of over 2016 (24,600), but still below the levels seen in 2015 (37,500) and 2014 (40,600).

Even though Alberta’s economy is growing and the recession is now squarely in the past, the residential construction industry may not pick up much speed in 2018. Demand for new homes will be limited by tighter rules on mortgage lending that came into effect January 1st, as well as higher interest rates expected later this year. That means total housing construction is likely to match, but not greatly exceed, last year’s total.

Housing starts in Alberta, graph

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