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Housing starts held steady in first half of 2018

Housing starts held steady in first half of 2018

Posted on: 7/12/2018 | Author: ATB Financial's Economics + Research Team

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There’s a new saying in post-recession Alberta that captures the cautiously optimistic mood: "flat is the new up!" That is to say, stabilizing is about all an industry can hope for. And in the housing market, “flat” is indeed the best description.

Home builders got started on 26,137 new units in June, including both single detached homes and multi-family units like condos and townhouses. (The figure is adjusted for seasonality, and is expressed in annualized terms—the number of homes that would be built in one year if the same pace of activity continued for twelve months.)

The June figure is down from the previous month, but it's the longer term trend that holds importance. Over the first half of 2018, the trend has been stable. The average between January and June was just under 28,000 homes (annualized rate)—almost precisely the same average seen over the last three years, which included two years of recession.

Stability in housing starts is a mixed signal for the economy. On the bright side, home builders continue to add new inventory in spite of higher interest rates and stricter mortgage lending rules. On the negative side, activity has stabilized well below the pre-recession levels and has yet to show signs of recovery.

A stronger economy would normally lift housing starts, but this may be offset by higher mortgage rates. The Bank of Canada raised its trend-setting rate another 25 basis points this week. All in all, “flat” may remain the best description for a while.

Housing starts, graph

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