Home building activity slips, still ahead of 2009

Construction of single-family houses in Red Deer tailed off in July, relative to the same month in 2009.

Construction of single-family houses in Red Deer tailed off in July, relative to the same month in 2009.

But residential building in the city still remains well ahead of last year’s pace, according to statistics released Tuesday by Canada Mortgage and Housing Corp.

The national housing agency reported that there were 26 starts on single-detached homes in Red Deer in July, down from 37 a year earlier.

However, starts on units in multi-family buildings numbered 16 last month, up from six in July 2009, so total starts this year were only one fewer, at 42.

From January to July, a total of 399 homes were started in Red Deer: 243 single-detached and 156 in multi-family projects. That was nearly double the tally for the same period in 2009, when there were 147 single-detached and 56 multi-family starts.

Among the larger urban centres in Alberta, Calgary, Edmonton, Medicine Hat and the Regional Municipality of Wood Buffalo all posted sharp increases in housing starts from July 2009 to July 2010, while Grande Prairie was about 11 per cent higher and Lethbridge was down by half.

Their combined starts for July were 61 per cent higher this year than last.

For the year to date, all of the cities are higher in 2010 than 2009, except the Regional Municipality of Wood Buffalo.

Nationally, housing starts fell in July for the third straight month, CMHC reported. The drop was led by a decline in single-unit homes.

“We’ve seen a cooling on the demand side of the housing market for a good six months now and the supply side tends to follow that,” said Robert Kavcic, an economist at the Bank of Montreal (TSX:BMO).

“Sales actually peaked at the end of 2009 and I think it makes sense that construction activity peaked a couple months ago.”

The housing market helped pump Canada’s economy out of recession, but has stalled in recent months as consumers face rising mortgage rates and worries over a still-fragile economic recovery.

Canada’s housing market is now cooling faster than in any other country amidst a recent global real estate slowdown, according to Global Real Estate Trends, a report released Tuesday by Scotiabank (TSX:BNS).

After a sharp rebound in the market earlier this year, the downward trend in home building activity should not come as a shock, said TD Bank (TSX:TD) economist Dina Cover.

Many Canadians rushed to enter the housing market in the second half of last year and the first half of this year as buyers hoped to secure mortgages while interest rates were historically low and before the introduction of new mortgage lending rules and the harmonized sales tax in B.C. and Ontario.

With files from The Canadian Press.

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