Housing starts ahead of last year’s pace

A jump in multi-family housing projects this year has pushed residential construction in Red Deer ahead of last year’s pace.

A jump in multi-family housing projects this year has pushed residential construction in Red Deer ahead of last year’s pace.

During the first six months of 2014, work started on 285 multi-family units in the city, Canada mortgage and Housing Corp. reported on Wednesday. That’s up a third over the 214 starts recorded from January to June last year.

However, starts on single-family homes in Red Deer slipped seven per cent to 186 from 200 over this same period. That netted out to an overall 14 per cent increase in total housing starts, to 471 from 414.

Elsewhere in the province, the six-month construction tally was up this year in Calgary, Lethbridge and Medicine Hat; but down in Edmonton, Grande Prairie and the Regional Municipality of Wood Buffalo. Among Alberta’s smaller urban centres, housing starts in Lacombe fell to 25 from 53, but in Sylvan Lake jumped to 122 from 83.

In the month of June alone, there were 52 housing starts in Red Deer, with 22 of these single-family projects and 30 in the multi-family category. That was up slightly from the same period a year ago, when there were 36 single-family and 14 multi-family for a total of 50.

Nationally, the pace of housing starts in Canada defied expectations and picked up in June to a seasonally adjusted annual pace of 198,185 in June, compared with 196,993 in May. Economists had expected the rate to come in at about 190,000 for the month.

However, a jump in rural starts and a slight increase in urban starts pushed the total higher for the month.

CIBC economist Nick Exarhos said the increase goes against the conventional reasoning that this year would bring an expected slowdown to the market.

“Today’s report also gives us more confidence that the weakness seen in April GDP due to a drop in construction was indeed transitory, and that for the second quarter as a whole, the building sector-along with other economic activity, will show signs of heating up,” Exarhos wrote in a note Wednesday.

BMO senior economist Robert Kavcic noted that Alberta increased to 53,700 starts on an annual basis, up from 33,600 in May, a pace topped only in the pre-recession housing boom in 2006-07.

“Like almost everything else we’re seeing these days, upward momentum is largely concentrated in Alberta — but that’s OK, they need the houses,” Kavcic wrote.

The CMHC report came as real estate company Royal LePage said big cities Toronto, Vancouver and Calgary are driving increases in national average home prices, while smaller cities had more moderate gains. Royal LePage said the average price of a home in Canada increased between 3.9 per cent and 5.2 per cent in the second quarter of 2014 and prices are expected to go up steadily for the rest of the year.

With files from the Canadian Press.

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