Following a busy spring season, the Canadian residential construction market has cooled off and should continue to moderate, according to Robert Kavcic, economist at BMO Capital Markets.
Canadian housing starts totalled 208,500 annualized units in July, down 6.1% from June. Year-to-date, starts have now averaged almost 216,000 units, the highest seven-month total since October 2008.
In B.C. housing starts were down 22.9%.
However, Kavcic noted that momentum will continue to slow, partly driven by new mortgage rules announced earlier this year by the federal government that reduces amortization from 30 years to 25 years. Starts of urban single units decreased 4% to 64,300 and multi-unit starts decreased 7.6% to 123,000.
"Multi-unit starts are down from extremely high levels in the spring, and the trend to a more sustainable pace shouldn't bother policy makers who were concerned about an overheated market," said Kavcic.
"The trend among builders for more multi-units is in part because of limited available land in cities like Toronto and Vancouver, and better affordability in the condo space."
