The low down on Housing Starts

Canada's got a housing supply shortage, and it’s getting worse: The latest data from the Canada Mortgage and Housing Corporation (CMHC) showed that housing starts for March declined 11% from February. 

Housing starts measure new residential construction projects. As soon as the ground is broken on development, whether a single-family home or multi-residence unit, it gets added to the housing start count.

  • It is a leading indicator since the housing market's health is correlated with mortgage rates. Higher mortgage rates reduce the number of qualified buyers.

  • Even though demand is high, developers might look at high borrowing costs and delay projects out of fear that they won't have enough buyers.

  • But without more supply (or a steep crash in demand), there’s only one way for housing prices to go and that’s upwards.

The CMHC's chief economist said high-interest rates have made it challenging for developers and homebuilders to break ground on new projects, which has caused housing starts to decline. 

The bottom line: Falling housing starts means we aren’t building our way out of our housing shortage.