Canada’s housing market showed signs of recovery in October, with the national pace of housing starts rising by eight per cent compared to September. According to the latest data from the Canada Mortgage and Housing Corporation (CMHC), the seasonally adjusted annual rate (SAAR) of housing starts reached 240,761 units in October, up from 223,391 in the previous month.
Urban Housing: A Mixed Picture
The increase in housing starts was driven largely by urban areas, which saw a six per cent rise in the annual pace of construction, reaching 223,111 units. The bulk of this growth came from multi-unit housing starts, such as condominiums, townhouses, and apartment buildings, which rose by seven per cent to 175,705 units. On the other hand, single-detached urban housing starts showed a more modest increase of just one per cent, totalling 47,406 units.
Rural housing starts, though a smaller portion of the overall market, were estimated to have reached 17,650 units.
Regional Variations: The Prairies and Atlantic Provinces See Gains
CMHC’s report highlighted regional variations in housing activity. The Prairies, Quebec, and Atlantic provinces have experienced higher levels of construction in 2024, contributing to the overall uptick in national housing starts. Meanwhile, Ontario and British Columbia have seen declines, with Ontario in particular facing challenges.
In fact, year-to-date housing starts in major cities like Toronto and Vancouver reflect these regional disparities. Toronto has seen a significant drop of 21 per cent in housing starts compared to the same period in 2023. Vancouver, after a record-breaking 2023, is down by 18 per cent year-to-date. However, Montreal has bucked the trend with a 12 per cent increase in housing starts over the same period.
Housing Affordability: Still a Major Concern
While the increase in housing starts is a positive sign for the Canadian economy, CMHC’s chief economist Bob Dugan cautioned that the pace of construction is still far below what is needed to address the ongoing affordability crisis in Canada’s urban centres. This remains a key challenge as high housing demand continues to outstrip supply, particularly in major metropolitan areas.
Despite the growth in construction activity, affordability issues remain pressing. CMHC's latest data underscores the fact that Canada is not building enough homes to meet the needs of its growing population, particularly in cities like Toronto, Vancouver, and Montreal.
Looking Ahead: A Soft Outlook for Housing Starts
While October’s strong performance may suggest a positive outlook, economists warn that the national housing market could face challenges moving forward. TD economist Rishi Sondhi pointed out that although the pace of starts in October was healthy, the overall outlook for housing starts in 2025 is expected to soften, largely due to ongoing weakness in Ontario's housing market.
Pre-sales activity in the Greater Toronto Area (GTA) remains sluggish, and with fewer homes being sold before construction begins, Sondhi predicts that starts will decline next year. Ontario, which has been a major driver of Canada’s housing market in recent years, has seen a significant slowdown, with starts in the province dropping to levels not seen since 2020.
Nevertheless, Sondhi suggests that homebuilding will likely remain strong in other parts of Canada, especially in regions where demand is still robust.
Conclusion: Progress, but Challenges Ahead
In summary, the October 2024 housing start numbers from CMHC reveal a mixed yet somewhat optimistic picture for the Canadian housing market. While growth in urban housing starts is a positive development, regional disparities and the ongoing affordability crisis are critical factors that could dampen future growth. The outlook for housing starts remains uncertain, with Ontario and British Columbia facing continued challenges, while other regions like Quebec and the Prairies show promise.
As Canada continues to grapple with housing affordability, it’s clear that more needs to be done to ensure that construction levels meet the demand in key urban centres. The increase in housing starts is a step in the right direction, but the country still faces an uphill battle to make housing more accessible for all Canadians.
