The Canada Mortgage and Housing Corporation released its housing starts figures for May 2018, reporting a drop in new home construction.
The monthly trend for national housing starts was 216,362 units compared to 225,481 in April 2018. The trend is a six month moving average of seasonally adjusted annual rates (SAAR).
In Toronto, housing starts trended down mostly due to fewer apartment and townhome starts. The better supplied resale market and high borrowing costs have impacted the demand for new homes, especially when it comes to detached homes. There have also been fewer home sales since this time last year, so construction is slowing.
With so many new condo sales in 2017, we thought housing starts would stay strong throughout 2018, but things are slowing down quicker than we expected. There’s the potential for some new condo sales this summer, but the season typically isn’t busy and for the most part, any sales of preconstruction units in the coming months wouldn’t break ground until a later date (depending on how close the project is to the start of construction).
It’s a different story in Kingston where housing starts trended up for the third consecutive month, with increases in detached homes and multi-unit housing. There is strong demand for new homes in Kingston due to the shortage of supply in the resale market, where new listings recently dropped to its lowest level since March 2005.
We’re actually headed out to Gananoque this week to check out South & Stone Condos by CaraCo Development Corporation. They’re developing a new condo on the St. Lawrence River. It seems like it’s going to be a great weekend getaway/investment opportunity for GTA families. Stay tuned, we’ll be sharing some more details soon!
Brantford also trended higher, mostly due to detached home construction. Though Hamilton’s home prices are moderating, some buyers are still gravitating to Brantford’s more affordable new home market.
Another area that was benefitting from buyers in nearby cities was Windsor, but that doesn’t seem to be the case anymore. For a while, Greater Toronto Area buyers were looking to Windsor for affordable new homes, but housing starts fell 14%, making May the sixth consecutive month of downward trends.
It will be interesting to see how housing starts trend in the coming months since new home sales have been lower than last year for basically all of 2018.