OTTAWA–Canadian housing starts fell markedly in May, and residential construction activity is set to decline further to historic lows because of the economic fallout from the coronavirus.
The housing-starts data from Canada Mortgage and Housing Corp. for May didn’t incorporate Quebec. CMHC said data collection in the province resumed in May after a province-wide construction shutdown to limit the spread of the virus. CMHC said the housing starts totals without Quebec are meant to better assess the impact of the pandemic where the survey was conducted in the months of April and May.
Housing starts for May came in at a seasonally adjusted annualized rate of 132,576 units, down 20.4% from a comparable 166,477 total in the previous month. Market expectations were for starts totaling 160,000, according to economists at TD Securities.
The trend measure in housing starts, or a six-month moving average of the monthly seasonally adjusted annual rate, was 151,072 in May with Quebec excluded, down from a comparable 155,600 units in the previous month.
Canada’s housing market is now facing several headwinds, among them a curtailment in immigration as the country closes its borders because of the pandemic; a significant drop in employment; and a drop in rents, which is generally a bearish sign for housing construction. Housing activity has been a major driver of Canadian economic growth over the past decade.
CMHC had already warned of weaker housing-start data in the months ahead. Late last month, it released a forecast for the Canadian housing market, and warned housing starts could reach historic lows in the second and third quarters before rebounding. It also expects a sizable decrease in housing-sales activity, and a drop in housing prices by as much as 18%.
“The precise timing and speed of the recovery is highly uncertain because the virus’s future path is not yet known,” Bob Dugan, CMHC’s chief economist, said in the agency’s late May forecast.
source:marketscreener
