The housing starts statistics was out last Wednesday. July’s housing starts
for Canada came at 236,500 annualized,the same as the previous month. The
single detached starts declined for the fifth time in the last 6 months.
The multiples starts increased for a third consecutive month to reach
B.C. had one of the best performances with starts up by 19.4%.
Surprisingly, Alberta’s starts declined by 6.6%.
However there is good reason to believe that a soft landing in the new
homebuilding market is coming down the road. For instance, the number of
building permits approved, which is an indicator of future starts,
declined 5.3%. The mortgage rates are higher and the average price of
new houses is up. We anticipate the starts to go down from 224,300 units
in 2005 to 220,000 units in 2006 and 200,000 units in 2007. In the
resale market to also slow down to “a more sustainable pace-around the
mid-single- digits by 2007."
This is by no means a bursting bubble. Only a slow down which by
historic standards is still a strong housing market.