Canada sees 2% rise in housing starts for 2024

Canada’s housing market showed a modest gain in 2024, with housing starts increasing by 2% compared to the previous year, according to a report by Canada Mortgage and Housing Corp. (CMHC). The national total reached 245,120 housing starts, up from 240,267 in 2023.

The increase was largely driven by activity in Alberta, Quebec, and the Atlantic provinces, despite a combined 3% decline in housing starts across the country’s six largest metropolitan areas. Vancouver, Toronto, and Ottawa experienced decreases, while Calgary, Edmonton, and Montreal posted gains.

“Canada’s urban centres saw an uptick in housing starts in 2024 compared to last year, marking the third-highest year on record,” said CMHC chief economist Mathieu Laberge in a press release. “While this annual increase shows some signs of progress, Canada still needs significantly higher supply growth to restore affordability in urban centres.”

Housing challenges persist

CMHC has emphasized that Canada needs an additional 3.5 million housing units by 2030, beyond the 2.3 million units already projected to be built, to return affordability to 2004 levels. Currently, the agency estimates that Canada could potentially build up to 400,000 new housing units annually if construction resources were maximized.

Despite the overall increase in housing starts, certain areas of the market faced significant challenges. The seasonally adjusted annual rate (SAAR) for housing starts dropped 13% in December, falling to 231,468 units from 267,140 in November.

CIBC economist Katherine Judge called this decline “a sharp drop-off,” noting it was “well below” market expectations of 250,000 units. However, Judge highlighted that gains in the previous two months had lifted fourth-quarter activity 4% above the third quarter.

“That followed solid gains in the two prior months, however, leaving the pace of building for the fourth quarter overall four per cent higher than (the third quarter),” she said in a note. “While we expect building to increase ahead in line with falling interest rates, the acceleration in starts will be limited by the weakness in condo pre-sales.”

Urban and rural trends

The annual pace of urban housing starts fell 14% in December to 214,000 units. Multi-unit urban homes, including apartments, condominiums, and townhouses, saw a 15% decrease, while single-detached homes dropped 10%. The rural market fared somewhat better, with a seasonally adjusted annual rate of 17,468 housing starts in December.

Regional and economic outlook

A growing divide has emerged between Ontario and other regions. TD economist Marc Ercolao noted that while housing starts remained strong across the country, Ontario has faced declining activity.

“Starts are declining in [Ontario], as condo building is retrenching under the weight of weak demand,” Ercolao said. He predicted further declines in the province for 2025, exacerbated by slowing population growth.

Looking ahead, economists expect some improvement in housing starts as interest rates decline. However, the rebound may be tempered by ongoing weaknesses in condo pre-sales and construction constraints.

Source CMP
By Jonalyn Cueto