Cracks are showing. It’s only going to get worse.
This, in a nutshell, according to TD Economics, is what is going on regarding housing starts in Canada because of the COVID-19 pandemic.
Figures released by Rishi Sondhi, an economist with TD Bank’s research arm, indicate that Canadian housing starts declined 7.3 percent in March 2020 compared to February.
According to Sondhi, declines were “broad-based”, with start of new home construction down in seven out of 10 provinces in the country.
In B.C., housing starts in urban areas were down by 7,800 units.
In Ontario, new construction fell by 9,800 units in urban areas.
Urban centres in Saskatchewan and Quebec also experienced drops in new home construction.
However, urban housing starts were up in Alberta, Manitoba, and New Brunswick.
“The calm before the storm,” Sondhi described the implications of this situation.
Sondhi noted that while housing starts “held up relatively well in March”, the “broad-based decline across provinces suggests that the COVID-19 pandemic is beginning to impact activity”.
“The situation will only get worse in April,” according to Sondhi.
In the April 8 posting by Sondhi on the TD Economics site, the economist noted that in the morning of that day, Statistics Canada released a “flash estimate of building permits for March” for around 30 percent of municipalities.
“Residential building intentions were down 35% (y/y) [year on year] in the flash estimate, with substantial declines recorded in Ontario, Quebec and British Columbia,” Sondhi noted.
According to Sondhi, homebuilding is “poised to suffer a notable setback in the near-term as the pandemic weighs on construction”.
Homebuilding activity could rebound in the second half of the year, Sondhi noted.