Canada’s Housing Starts Post Bigger Decrease Than Expected as Multi-Unit Developments Slide

Housing starts decreased last month in Canada, posting a bigger pullback than analysts expected to scale back part of June’s surge with the retreat seen in new multi-unit developments.

The starts came in at 206,314 on an annualized basis from 246,200 in June, a rate that was the highest since November of last year, the Canada Mortgage and Housing Corp. said on Thursday. Analysts polled by Econoday were looking for about 220,000.

The six-month trend decreased to 219,988 units in July from 221,738 units in June, the CMHC said.

“July marks the first month where retaliatory tariffs on steel and aluminum imports from the US were in effect, which likely raised construction costs faced by Canadian builders,” said Rishi Sondhi, an economist with TD Economist. “While this is negative for homebuilding, July’s pace was still healthy and starts look likely to remain elevated in the near-term — consistent with healthy permit issuance.”

Single-detached starts dropped 3% to 66,000 units, TD said, while saying the “volatile multi-family segment led the overall decline” by falling to 140,000 units after a strong gain in June.

RBC Economics also noted that the declines last month were concentrated in multi-unit starts, although it was only slightly below last year’s pace, which was a record high, according to Josh Nye, a senior economist.

“Single unit starts, meanwhile, continued to trend lower and have accounted for less than 30% of urban construction year-to-date, for the first time on record,” Nye wrote in a note.

With rising interest rates and “more stringent” rules on qualifying for a mortgage having weighed on the resale market, RBC expects similar downward pressure will be placed on new construction.