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Housing starts drifting lower

Housing starts drifting lower

Posted on: 3/12/2018 | Author: ATB Financial's Economics + Research Team

​​Alberta’s home builders had a good year in 2017, but at the end of last year, home builders pulled back. Now, at the start of 2018, the pace of building appears to be trending lower.

Construction began on 24,301 new homes in February. This number includes 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. February’s total was 3.4 per cent lower than January and 8.5 per cent lower than February of last year.

Looking further into 2018, it’s unlikely that residential construction will pick up the pace. Demand for new homes is now limited by tighter rules on mortgage lending that came into effect January 1st, by higher interest rates and by fewer people moving to the province.

There are also worries that an oversupply is developing in Alberta’s major cities. Many condo projects are just starting to break ground which will add many more new homes to the housing stock. In fact, there is a growing number of newly completed houses that remain vacant in many of Alberta’s newer neighbourhoods. It’s because of these reasons that residential construction will be lower this year.

Housing starts, graph​ ​

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