The construction of new homes in Canada is surging.
Based on a recent update by RBC Economics, housing starts have bounced back to pre-COVID-19 lockdown levels.
In June 2020, a total of 212,000 new constructions were reported across the country.
“New building activity appears to have been relatively resilient throughout the downturn – even the lowpoint in April wasn’t as big a decline as a lot of other economic indicators for that month,” RBC economist Claire Fang wrote on July 9.
There’s more on the way.
“Building permits have remained resilient (221k units as of May) as well, suggesting there is still some backlog of additional new building activity in the near-term pipeline,” Fang noted.
Housing starts dipped to a low point in April 2020 at 164,000.
“Home resales fell much more dramatically in April, but also appear to have rebounded surprisingly quickly over May and June given stronger-than-expected early reports from local markets like Toronto and Vancouver,” Fang wrote.
In May, housing starts rose to 196,000.
In February this year, new home constructions numbered 211,000.
The figure decreased to 197,000 in March as pandemic lockdowns started.
B.C. maintained a fairly consistent number, starting with 42,000 new home constructions in February 2020.
In March, B.C. had 35,000; April, 30,000; and May, 39,000.
According to Fang, government support programs like the Canadian Emergency Response Benefit meant that household incomes have “probably held up significantly better than job markets to-date”.
In addition, interest rates are “exceptionally low”.
“Against that backdrop it is not so surprising that housing activity has been more resilient than many had been expecting,” Fang wrote.
Fang noted that risks remain, which include unemployment, lower immigration levels, and a resurgence of the virus.
“But, for now,” Fang concluded, “housing activity joins a growing list of sectors looking more resilient than feared early in the economic recovery.”