Canada Housing Starts Drop 1% in April to 240,229 Units — Update

By Paul Vieira

OTTAWA--Canadian housing starts fell slightly in April from the previous month, led by declines in the country's three biggest cities--Toronto, Montreal and Vancouver.

Housing starts across Canada totaled 240,229 units in April, down 1.0% from a revised 242,267 in March, Canada Mortgage and Housing said Wednesday. April's total matched the market consensus, according to economists at TD Securities.

The trend measure--a six-month moving average of the monthly seasonally adjusted annual rate of housing starts--dropped 2.2% to 238,585 units.

The pace of Canadian housing starts is well below what Canada's Liberal government requires to achieve its goal of roughly four million new homes built by 2031, in an effort to deal with stretched affordability. Economists at TD Bank calculate that, starting next year, Canada would need to construct 550,000 new units annually to meet its housing goal.

"Achieving 550,000 new homes each year is an extremely daunting task," TD Bank economists said. Meanwhile, memos prepared by Canadian officials, and reviewed by The Wall Street Journal, indicate that a shortage of skilled construction workers, such as carpenters, poses a significant headwind for the government's goal for an acceleration in house building.

CMHC chief economist Bob Dugan said the results reflect "challenging borrowing conditions," with interest rates elevated. "We expect to see continued downward pressure in these large centers," he said, in reference to softness in Toronto, Montreal and Vancouver.

The Bank of Canada's policy interest rate has been at 5% since July of last year, although Gov. Tiff Macklem said a cut is possible next month should data suggest a sustained softening in inflation.

Write to Paul Vieira at paul.vieira@wsj.com

(END) Dow Jones Newswires

May 15, 2024 08:57 ET (12:57 GMT)

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