July housing starts hint at condo construction cooldown

The pace of new home construction slowed down in July largely because of an 8-per-cent decline in the building of multiple urban starts which include condominiums, the CMHC said Tuesday.

Canada's housing agency said the seasonally adjusted annual rate of home construction was 193,032 units last month. That's down from 202,338 units in June and less than the 195,000 pace that economists had been expecting.

"The decline is mostly due to a drop in multi-family units which fell by 8.2 per cent (or 10,700 units)," Scotiabank said in a note to clients, while adding that the condo segment is "more volatile and lumpy than single-family units" which only inched lower by 0.8 per cent to 57,520 units.

Indeed, over a longer time frame, the picture is nowhere near as bleak. The six-month average number for housing starts actually ticked up to 185,586 units in July compared to 184,035 in June, CMHC noted.

Housing starts are a tally of all new home construction across the country. They are considered a leading indicator both for the housing market and the economy overall because they tend to lead to more spending and activity down the line.

The pace of new building decreased in Ontario, the Prairies, Atlantic Canada and Québec, while it increased in British Columbia.