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Increase in New Housing Prices Continues to Slow - May 12, 2008

Year-over-year growth in new housing prices slowed for a second consecutive month in March. This deceleration continues a downward trend that started in September 2006, due mainly to the softening market in Alberta. A Statistics Canada report released this morning indicates that contractors' selling prices rose 6.1% between March 2007 and March 2008, a slightly slower pace than the 6.2% year-over-year increase posted in February 2008. Nationally, prices rose 0.2% between February and March.

Regionally, for the 11th straight month, prices rose at the fastest pace in Saskatoon, with a year-over-year price increase of 46.2%, down from the record-setting pace of 58.3% in February. Saskatoon housing prices rose 2.1% from February. In Regina, the year-over-year increase was 27.8% in March, down marginally from the annual growth rate of 28.6% recorded in February. Regina's new housing prices rose 1.7% between February and March.

In Winnipeg, prices rose 15.0% on a year-over-year basis. In Saskatoon, Regina and Winnipeg, builders reported higher prices as a result of increased material and labour costs, as well as a strong market and high demand for new housing.

In Edmonton, the 12-month growth rate slowed to 13.5% in March, the eighth consecutive month in which the pace of growth has decelerated. On a monthly basis, new housing prices declined in Edmonton for a third consecutive month, falling 1.1% in March. In Calgary, prices rose 5.3% between March 2007 and March 2008, slightly faster than the 5.2% increase between February 2007 and February 2008. Edmonton and Calgary continued to experience slow market conditions. Builders in both cities reported lowering their prices to generate interest and stimulate sales.

A strengthening economy, coupled with increased material and labour costs, contributed to record increases in Nova Scotia. Homebuyers in Halifax saw prices rise 12.8%, up from the year-over-year increase of 11.4% in February, while buyers in St. John's saw a 12.0% gain compared with March 2007.

On the West Coast, the 12-month increase in contractors' selling prices for Vancouver was 6.1%, while in Victoria it was 1.2%, down from 1.6% in February.

Windsor recorded year-over-year deflation in March, with prices falling 0.6% from March 2007. This continues the downward trend that started 18 months ago.

Housing Starts Up in BC - May 8, 2008

The seasonally adjusted annual rate of housing starts was 213,900 units in April, down from 243,000 units in March, according to Canada Mortgage and Housing Corporation (CMHC).

“Housing starts in April moderated from the high levels posted in February and March. Most of the decrease reflected a drop in multiple starts, which in March and February had reached their second and third highest levels since March of 1978, respectively,” said Bob Dugan, Chief Economist at CMHC’s Market Analysis Centre. “Despite the decline, starts remained robust at over 200,000 units.”

In April the seasonally adjusted annual rate of urban starts edged down by 16.3 per cent to 185,400 units compared to March. Urban multiples were also down to 113,900 in April from 141,000 in March. In addition, singles decreased 11.3 per cent to 71,500 units.

The seasonally adjusted annual rate of urban starts went down in all regions of Canada, except British Columbia, which saw an increase of 17.1 per cent to 34,900 in April. Urban starts decreased to 7,500 units in Atlantic Canada, 37,600 units in Quebec, 73,000 units in Ontario, and 32,400 units in the Prairies. In terms of single urban starts, all regions except Quebec were down in April. Quebec registered an increase of 9.3 per cent to 12,900 units.

Rural starts were estimated at a seasonally adjusted annual rate of 28,500 units in April2.

For the first four months of 2008, actual starts in rural and urban areas combined were up an estimated 3.3 per cent compared to the same period last year. Actual starts in urban areas to date have increased by an estimated 9.6 per cent over the same period in 2007. Actual urban single starts for the four months of this year were 14.9 per cent lower than they were a year earlier, while multiple starts increased by 29 per cent over the same period.

Construction Intentions Continue to Cool Off - May 6, 2008

Construction intentions in Canada continued to cool according to a report released this morning by Statistics Canada. As a result of a marked decline in Alberta, the total value of building permits in Canada dropped 4.5% in March to $5.6 billion. This was the fourth decrease in five months. Both residential and non-residential sectors declined in March.

The total value of permits reached $17.3 billion for the first quarter of 2008, down 8.2% from the fourth quarter of 2007 and a third consecutive quarterly retreat.

Construction intentions continue to soften in the housing sector

In the residential sector, the value of building permits decreased 5.7% to $3.6 billion. This was the second lowest value in 13 months. It was generated by drops in values of both multi-family (-7.8%) and single-family (-4.4%) permits.

The number of multi-family units approved increased 4.6% while single-family units decreased by 8.5% in March. This was consistent with a general tendency observed over the last five years, where the demand has shifted from the more expensive single-family dwellings toward the more affordable multi-family units. The overall number of residential units approved has been on a downward trend since the summer of 2007.

Industrial and institutional permits pull down the non-residential sector

The value of non-residential permits fell 2.4% to $2.0 billion, a level not seen since April 2007. Intentions peaked for this component in May and June last year.

On the industrial side, the value of permits plunged 21.9% to $318 million, the third decline in four months and the lowest level since February 2007. This result was fuelled by declines in projects for utility buildings.

Following a 32.3% drop in February, the institutional component fell 4.7% to $454 million, mainly as a result of a decline in projects for medical buildings.

In the commercial component, the value of permits increased 5.3% to $1.2 billion, as a result of increases in various types of buildings such as warehouses, hotels, restaurants, recreation buildings and retail and wholesale stores.

Overall, the value of permits in each of the three non-residential components has been on a downward trend since the last part of 2007.

Four provinces post declines in their value of building permits

Alberta recorded the largest reduction in March (-32.9%) among the provinces. This decline had a significant impact on the overall results. Excluding Alberta, the value of building permits would have increased by 5.1% instead of declining 4.5% nationally. With marked retreats in both residential and non-residential sectors, the total value of construction intentions was below the $1 billion mark for the first time in 13 months.

The cumulative value of permits for the January-to-March period in Alberta totalled $3.7 billion, down 3.8% from the fourth quarter of 2007 and a third consecutive quarterly decline. This result was 19.2% lower than the peak recorded in the second quarter of 2007. Newfoundland and Labrador, New Brunswick and Manitoba also recorded reductions in March.

The most significant gain (in dollars) occurred in Ontario (+7.3% to $2.1 billion), as a rise in construction intentions for multi-family dwellings more than offset a fifth decrease in six months in the non-residential sector.

Saskatchewan and Quebec also posted sizeable gains, thanks in large part to non-residential permits.

Furthermore, in Saskatchewan, the value of residential permits in March was just 1.1% below the record of $96 million reached in December 2007. The robust demand for housing in Saskatchewan is positively affected by a dynamic economy and strong interprovincial migration. In Quebec, the value of housing permits dropped to $647 million, a 13 month low.

While the total value of permits increased in British Columbia and Nova Scotia, the level remained almost 10% below the average monthly level in 2007 for both provinces.

The demand for new dwellings falls in Calgary and Montréal

Overall, 11 out of the 34 census metropolitan areas showed a decline in March. The largest retreats (in dollars) were recorded in Calgary, Edmonton and Montréal.

In Calgary, the decline came in large part from the residential sector. The number of new units approved in March (692) was at its lowest level since July 2000.

In Montréal, the 1,536 new residential units approved represented the lowest number on record since December 2002.

In Edmonton, the decline came from a retreat in the non-residential sector after this component reached a near record level in February.

In contrast, the total value of permits in Kitchener reached a record high of $144 million, thanks to strong results in both residential and non-residential components.

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