Housing starts in Red Deer this year should exceed the tally for 2009 — but the difference will be a lot closer than might have seemed likely a few months ago.
For the sixth consecutive month, residential construction starts were fewer in November than for the corresponding period a year ago.
Canada Mortgage and Housing Corp. reported on Wednesday that worked commenced on 32 homes in Red Deer during November: 26 single-detached houses and six units in multi-family projects.
That compares with 59 starts a year earlier, with 31 of those single-detached homes and 28 consisting of multi-family units.
Cumulative housing starts in the city for 2010 stood at 534 as of the end of November, 13 per cent ahead of the 11-month tally in 2009.
But after a brisk start to 2010, the year-over-year difference has shrunk from a 227 per cent difference as of May.
Six of Alberta’s seven largest urban centres had fewer housing starts last month than in November 2009.
The greatest drop was in Grande Prairie, which was down 65 per cent.
The Regional Municipality of Wood Buffalo was 57 per cent lower, with Red Deer off 46 per cent, Lethbridge down 38 per cent, the Calgary census metropolitan area 33 per cent lower and the Edmonton census metropolitan area down 19.5 per cent. Housing starts in Medicine Hat jumped from 15 in November 2009 to 34 this November.
The combined housing starts of these urban centres in November were 29 per cent lower than in November 2009.
Nartionally, the seasonally adjusted annual rate for new home construction rose by 11.6 per cent, said CMHC. However, the increase was primarily due to a strong increase in urban multiple starts in Ontario — based on several major apartment projects in Toronto — that was more than enough to offset declines in all other regions of the country.
Diana Petramala, an economist at TD Economics, warned that November’s gain was not broad-based and the strong numbers belie some underlying softness in Canadian construction activity.
“Going forward, starts can be expected to continue to moderate from the current level as a slight oversupply in the new housing market will weigh on new home building in Canada,” she said.
Bank of Montreal economist Robert Kavcic agreed.
“The surge in housing starts in November was almost entirely due to the volatile Toronto multi-unit sector and, as a result, some of the gains will likely be reversed in the coming months,” Kavcic wrote in a report Wednesday.
“The bigger picture continues to be one of more moderate and stabilizing building activity in Canada after a strong post-recession bounce.”
Many Canadians rushed into the housing market during the second half of last year and the beginning of this year in advance of new mortgage regulations in April, an expected increase in interest rates and a new sales tax regime that took effect in July in Ontario and British Columbia. That had the effect of pushing sales ahead into the end of 2009 and the beginning of 2010 that may have otherwise taken place in the spring and summer.
CMHC predicts that housing starts will align themselves to demographic demand next year. But Petramala suggests that the expected softness in the Canadian resale housing market and a high inventory of unsold new homes could be a drag on housings starts.
With files from The Canadian Press.