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Housing starts rebound modestly

Housing starts rebound modestly

Posted on: 12/10/2018 | Author: ATB Financial's Economics + Research Team


When looking for signals about the health of the economy, some of the most closely watched indicators are those related to the housing market. One important piece of data is new housing starts—and the numbers in Alberta so far this year are not encouraging.

In November, builders started construction on 26,359 new homes, including single detached houses and multi-family units. The figure is adjusted for seasonality and is expressed at an annualized rate, that is, the total number of new homes that would be built in one year if the current pace were to continue for twelve months.

This is a nice rebound from October, but that’s not saying much. At just over 18,000 new homes, October’s level was one of the lowest in a decade. November’s total brings the average number of housing starts over the last twelve months to 26,005, down nearly 10 per cent from the previous twelve month period.

The weak number of housing starts this year is a reflection of an economy clearly stuck in second gear. While it’s true that the overall economy has improved from 2015 and 2016, home buyers are feeling hesitant. Adding to the struggle is the fact that the Bank of Canada has increased borrowing costs by raising its trend-setting overnight lending rate five times since the summer of 2017 in response to a strong and growing economy in most other parts of country.

The good news is that builders are responding to the slower market by building fewer homes, which should help stabilize prices.

Housing starts, graph​​​​

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