Pace of housing starts slips on big drop in B.C.

Canada Mortgage and Housing Corp. says the pace of housing starts slowed in most regions of the country in October, with an especially big drop in British Columbia.

The agency says the seasonally adjusted annual rate fell to 192,928 units in October, down from 219,363 units in September.

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The drop came as the seasonally adjusted annual rate of urban starts fell 12.1% in October to 176,131 units. Rural starts were estimated at a seasonally adjusted annual rate of 16,797 units.

Multiple-unit urban starts dropped 15.3% to 115,402 units for the month, while single-detached urban starts slipped 5.4% to 60,729 units.

CMHC says the pace of urban housing starts picked up in Ontario last month but there were declines in Quebec, the Prairies, Atlantic Canada as well as British Columbia

The annual pace of urban starts in B.C. fell to 25,517 in October compared with 46,294 in September.

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Bank of Montreal senior economist Robert Kavcic said British Columbia was the big story.

“We’ll see if this level of activity, particularly in Vancouver where starts fell to the lowest since 2011, holds in the months ahead in response to softening demand conditions,” Kavcic wrote in a note to clients.

The drop in home starts in Vancouver comes as real estate sales in the region have also fallen sharply in recent months.

In August, the B.C. government implemented a 15% tax on foreigners buying homes in Metro Vancouver, while the federal government moved last month to tighten rules for mortgage lenders and foreign buyers in an effort to stabilize hot housing markets such as Toronto and Vancouver.

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The national six-month moving average of the monthly seasonally adjusted annual rate stood at 199,920 units in October compared with 199,262 in September.

“The current trend in new building, in addition to projects currently under construction, suggests that residential investment isn’t likely to be an imminent drag on the Canadian outlook, even if its contributions to growth should be more muted given already elevated levels of activity,” says CIBC Capital Markets economist Nick Exharhos.

The housing starts data came as Statistics Canada reported municipalities issued $6.9 billion worth of building permits in September, down 7% from August.

The decrease was due in large part to a drop in plans for construction for non-residential buildings.

The value of non-residential building permits fell 22.3% to $2.2 billion in September as all three non-residential components — commercial, institutional and industrial — moved lower.

The value of permits in the residential sector gained 2.6% to total $4.6 billion in September, boosted by multi-family dwellings.