Housing starts down in August – CMHC

Jeff Evans

Housing starts dropped from July to August, according to CMHC. From CTV News:

he annual pace of housing starts in Canada slowed in August to 192,368 units, down from 199,813 in July, according to the Canada Mortgage and Housing Corp.

The pace fell short of the 195,000 units forecast by analysts.

“The Bank of Canada may be looking for a rotation away from housing and the consumer, but low rates continue to support residential investment,” CIBC economist Nick Exarhos said in a report.

From this, they are drawing the conclusion that the housing market it slowing down…from a 1.3% decrease from their projections.

“But despite recent resiliency, we still expect housing’s contribution to growth to slowly wane as we progress through this business cycle, with affordability concerns and a weak labour market putting pressure on the building sector going forward,” he said.

If the housing market was red hot…I think there would be greater concern of a bubble. However, growth is very moderate in housing. It has been repeatedly cooled down by government and lender policies. There will also always be a variance from forecasts, and it seems that they forecasted fairly accurately. I am not an economist, but from all I have seen in my 7 years as a mortgage broker, the economists have predicted wrong time, and time again. It is a simple matter of supply and demand, and the increase of supply only appears to be meeting the increase in demand. Unless there are significant changes in mortgage lending policy or an increase in interest rates, or immigration substantially decreases, I do not anticipate any change to the performance of the real estate market.


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