Canada: Housing Starts and Home Sales Showed Strength in November

Most of the advance in housing starts was in the multi-unit sector, while single-family homes picked up only slightly. On a non-seasonally adjusted basis, rental apartment construction has outpaced condos for most of the year. Provincially, home construction saw strong gains in Quebec, Alberta and BC. Montreal in particular had a strong month, with housing starts reaching their highest point since 2021. Ontario saw another monthly decline and is down almost 18% so far this year.

Separately, existing home sales rose by 2.8% m/m in November, after surging nearly 7% the prior month, remaining at the top of seasonal norms (graph 2). Many of those waiting on the sidelines for mortgage rates to start coming down made their move in October and November. We expect that remaining potential homebuyers were likely waiting for the Bank of Canada’s (BoC) December 11 policy rate announcement and for new mortgage rules to take effect on December 15. But as we recently reported External link., the new federal government mortgage policies will have a mixed effect on homebuyer affordability. 

Listings continued to slow in November, down 0.5%, pushing the sales-to-new-listings ratio up to 59.2% from 57.3% in October. There remained some inventory accumulation from earlier in the year, keeping average and benchmark prices relatively stable.

Regional differences remained significant. Quebec continued to have strong sales growth (5.2%), but price growth stayed muted (0.9%). Sales in Vancouver had another strong month posting 7.7% growth, building on the 11.4% increase in October. With listings almost flat, prices started to pick up, rising 3.2%. Toronto’s listings outpaced sales growth at 4.4% and 2.2% respectively, while prices fell 0.5%. As a result, Toronto remains in buyer’s market territory (graph 3). 

As we begin to wrap up 2024, homebuilding has faced many challenges that will continue into the new year, including construction labour shortages and an aging workforce. The cost of building materials skyrocketed early in the pandemic, and while the pace of growth has decelerated, prices remain high. Looking ahead, homebuilding faces headwinds of slower population growth due to changes in immigration policies and the threat of high tariffs from the incoming US administration. On the other hand, federal housing supply policies will continue to support new construction and borrowing costs have progressively come down over the second half of the year. The BoC’s policy rate has fallen from 5.00% to 3.25% in 2024, and we anticipate four more cuts of 25-basis-points each in the year ahead.