Canada builds homes faster in July, but gaps remain

Canada’s home building is picking up, but not fast enough, according to new national numbers.

In its July housing starts report published Monday, the Canada Mortgage and Housing Corporation says home building was four per cent faster than in June. If July’s level held for 12 months, that would equal about 294,085 homes a year. But it still falls short of the agency’s benchmark of 430,000 to 480,000 homes a year needed to restore pre-pandemic affordability.

“We’re talking about doubling housing starts,” said Tania Bourassa-Ochoa, deputy chief economist at the CMHC.

She added there are regional differences in the data.

Most of the momentum came from multi-unit projects in the Prairie provinces and Quebec. Montreal posted a 212 per cent year-over-year increase in housing starts. Vancouver recorded a 24 per cent increase in July.

However, in Toronto, housing starts fell 69 per cent year over year, with declines in both multi-unit and single-detached projects.

For its size, P.E.I. built at roughly double the national rate in July, about 121 starts per 100,000 people, compared with about 56 across Canada. The Island’s pattern also mirrors the national one, with multi-unit projects accounting for much of the increase.

“In some multi-units, we are quite a bit smaller,” said Sam Sanderson, executive director of the Construction Association of P.E.I. “The ability to get permits, is maybe a little bit faster than other jurisdictions.”

But the Island, like other provinces, still can’t keep up with demand or the CMHC’s affordability benchmark. In P.E.I., it would require lifting annual starts well beyond recent averages and building at or above historic highs.

“The shortage of skilled people will continue to be a problem in the years to come,” Sanderson said, citing challenges in reaching the benchmark.

CMHC explains that one reason for July’s increase is pre-planned projects reaching the “start” stage now. The corporation records a housing start when the foundation is complete, which can be a year or two after a project is initiated.

“Even if we’re seeing that increase and pick up in activity, that doesn’t necessarily reflect developer sentiment,” Bourassa-Ochoa said.

CMHC also projects activity could slow later this year, with higher costs and tariffs taking a toll.

“We’ve been in a context where the economy has been quite uncertain. We’ve had we’ve been facing geopolitical uncertainty as well,” said Bourassa-Ochoa.

CMHC says the six-month average also rose 3.7 per cent in July. Both the monthly total of 23,464 urban starts and the year-to-date tally of 137,875 were 4 per cent above last year.