New home starts drop

Residential construction activity in Red Deer slowed appreciably last month.

Residential construction activity in Red Deer slowed appreciably last month.

Statistics issued by Canada Mortgage and Housing Corp. on Tuesday indicated that there were just 20 housing starts in the city during September.

All were single-detached dwellings.

In August there were 64 residential starts, including 50 single-detached projects; and in July there were 49 starts, with 28 of these single-detached homes.

However, housing starts in Red Deer also dipped last September, when the tally reached 24, of which 16 were single-detached homes.

So far this year, residential construction in Red Deer is ahead of the pace to the same point in 2011.

As of the end of September, work had begun on 447 homes, with 262 of these single-detached houses.

That was up three per cent from the 434 homes started (including 236 in the single-detached category) during the first nine months of 2011.

Elsewhere in the province, year-to-date housing starts were up 96 per cent in the Medicine Hat area, 69 per cent in the City of Grande Prairie, 60 per cent in the Calgary metropolitan area and 36 per cent in the Edmonton metropolitan area.

The Lethbridge area was down 35 per cent and the Regional Municipality of Wood Buffalo had fallen by 50 per cent.

Nationally, the seasonally adjusted annual rate of urban starts was down three per cent in September, said CMHC. But it noted that the figure was still above what economists consider necessary to meet the growth rate in household formations.

“In our view, Canada still has overbuilding concerns,” said TD economist Francis Fong.

“Demand for new homes is primarily being supported by accommodative interest rates.”

A global outlook released Monday by the International Monetary Fund singled out housing and household debt as the key areas of concerns for Canada.

“A sharp or sustained decline in house prices could seriously set back the leveraged household sector and domestic demand,” said the Washington-based financial institution.

Scotiabank economist Derek Holt said he expects Canada’s economy will take a little bit of a hit from housing during the third quarter, noting that while still strong, new home construction during the summer was below the level achieved in the spring.

Economists expect the slowing to continue across the board in starts, sales and prices in subsequent months. Over-saturation, high prices, high debt levels and recent tightening of mortgage rules are already impacting the resale market, they noted, particularly in Toronto and Vancouver.

The seasonally adjusted annual rate of urban starts for September was down 18.2 per cent in Ontario and 3.7 per cent in British Columbia. It was up 17.6 per cent in the Prairies, 20.3 per cent in Atlantic Canada and 1.3 per cent in Quebec.

With files by The Canadian Press.

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