Home construction dips in Toronto in February
Photo: James Bombales
Mirroring a nationwide dip in home construction, Toronto builders began work on fewer homes in February compared to the previous month.
In a media release accompanying the data published this week, the Canada Mortgage and Housing Corporation (CMHC) noted that both single-detached and multi-unit housing starts fell in February for the Toronto region.
Housing starts measure how many homes began construction during a given period and are generally viewed as a key factor in determining market health.
January was viewed as a particularly strong opening to the year so, with a lot to live up to, February clearly missed the mark. All in all, the seasonally adjusted annual rate for housing starts in the Toronto region fell by four percent compared to January’s annual rate.
Economists have cautioned not to read too much into February’s housing market data as it was largely unaffected by the significant global pandemic concerns and market uncertainty around COVID-19 that began materializing later in the month.
“After a slowdown at the end of 2019, Canada’s housing starts were on a stronger footing this year,” wrote BMO Economist Priscilla Thiagamoorthy.
“Still, that’s all in the rear-view mirror at this point. The plunge in oil prices combined with the COVID-19 impact could provide the perfect storm for a nearly stalled economy already facing structural headwinds.”
The message here is really: What a difference a month can make.
In February, BMO Senior Economist Jennifer Lee had applauded Canada’s consistently strong housing market in response to the encouraging January housing starts data. She wrote that the solid pace of starts would likely continue through the near term.
While most economists are not expecting Canada’s housing market to suffer major long-term damage from the COVID-19 pandemic, there’s still a great deal of uncertainty over how it will impact activity through 2020.
TD Bank Economist Rishi Sondhi wrote earlier this week that the bank’s forecast for Canadian home building remains optimistic, with projections of over 200,000 units starting construction this year.
“However, this depends on the evolution of the novel coronavirus, which alongside the recent plunge in oil prices, places downside risk to this view,” he wrote.