The Canadian housing market has been making a steady comeback over the past few months and the August CMHC monthly housing statistics prove that housing starts are making a sharper jump than expected in the real estate market. In addition, low mortgage rates are still the norm. So with the Canadian housing market gaining ground as it recovers from the economic downturn of months past, now may be an excellent time to buy, build or sell.

Economists had predicted housing starts to increase to approximately 139,000, but with home starts in August jumping more than 12% compared to July, CMHC is confident in the housing market’s economic forecast. Construction companies are benefiting from the rise in house starts as well, as they began work on 14,177 new homes in August for a seasonal adjusted annual rate of 150,400.

According to the CMHC, the seasonally adjusted annual rate of urban starts rose in August by 14% to 131,800 units. Multiple-unit construction rose 23.8% to 77,600 units, and the single-unit sector gained 2.5% to 54,200 units.

Seasonally adjusted annual rates (SAAR) of urban starts increased for many provinces. Here are some housing market highlights over the last month. Urban construction was up:

56% in British Columbia

16.1% in the Prairies

13.8% in Ontario

9.6% in Atlantic Canada

2.5% in Quebec

While an overall increase could be found throughout the country, rural starts were unchanged in August at 18,600 units.
Why the increase in housing starts? Aside from the Canadian housing market showing signs of recovery from the economic downturn, the housing start increase is driven by unit sales and attractive existing home prices. Below is a table detailing the increase in housing starts from across the country between August 2008 and August 2009.

Housing Starts, Actual and seasonal adjusted annual rate (SAAR)*
	Actual		SAAR
	August 2008	August 2009	July 2009	August 2009
	Final	Preliminary	Final	Preliminary
Canada, all areas	19,626	14,177	134,200	150,400
Canada, rural areas	2,819	1,990	18,600	18,600
Canada, urban centres	16,807	12,187	115,600	131,800
Canada, singles, urban centres	7,063	5,211	52,900	54,200
Canada, multiples, urban centres	9,744	6,976	62,700	77,600
Atlantic region, urban centres	879	835	7,300	8,000
Quebec, urban centres	3,082	3,409	40,000	41,000
Ontario, urban centres	8,026	4,172	36,900	42,000
Prairie region, urban centres	2,380	2,271	20,500	23,800
British Columbia, urban centres	2,440	1,500	10,900	17,000

*Information taken from CMHC

In addition to the rise in house starts, sale prices of newly completed and unabsorbed single-detached and semi-detached dwellings have been showing promise for the remainder of 2009 and into 2010.

Resale activity is also up in August from this time last year, especially in Canada’s large metropolis centres. According to the CMHC and multiple listing service (MLS), resale activity rose:

117% in Vancouver

27% in Toronto

17 % in Calgary

9 % in Montreal

A dramatic 62% increase of overall new home sales in August indicates Canada’s climb out of recession but we are still behind the mark compared to where we were in 2008. As Kelvin Mangaroo, founder of RateSupermarket.ca states, “Regardless of where we were a couple of years ago, the surge in home starts and new home sales indicates a confidence in the real estate market that we have not seen over the last few months. With the increased number of searches we’ve seen done on RateSupermarket.ca, it appears that home buyers are taking note of the deals being offered and the low mortgage rates available, and are looking to take advantage now.”

While housing sales and starts seem to be up in major metropolis cities across Canada, the housing market is still recovering from the economic activity seen over the past 10 months. Even when the labour market officially stabilizes across the country, it will take time for that to result in a consistent increase in spending levels.

Caroline
PR@RateSupermarket.ca

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