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Housing starts will regain momentum later this year or into 2014, CMHC says

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(Globalpost/GlobalPost)

OTTAWA - Canadian builders appear poised to pick up the pace of residential construction in the later half of 2013 but the total number of starts will remain below last year's, according to a forecast issued Tuesday by Canada Mortgage and Housing Corp.

In its second-quarter housing market outlook, CMHC estimates between 173,300 and 192,500 units of housing — including single- and multiple-family dwellings —will be started this year, with a mid-point forecast of 182,900 units.

That's down nearly 15 per cent below the 2012 level of 214,827 units.

In 2014, housing starts are expected to range between 166,500 and 211,300 units, with a mid-point forecast of 188,900 units, up 3.3 per cent from 2013.

The agency also says sales of existing homes are expected to range between 412,000 and 474,800 units in 2013, with a mid-point forecast of 443,400 units, down from the 2012 level of 453,372 sales.

In 2014, Multiple Listing Service sales of previously owned homes are expected to range between 435,800 and 501,400 units, with an increase in the mid-point forecast to 468,600 units.

The average MLS price is forecast to be between $359,400 and $380,000 in 2013 and between $362,400 and $392,200 in 2014.

"So far in 2013, the average monthly growth rates of MLS sales, new listings and prices have all been increasing," said Mathieu Laberge, the agency's deputy chief economist. "This follows a period of average monthly declines that held sway over the second half of 2012.

"This change in the trend of the resale market is expected to eventually lead to a similar change in the trend of the new home market, as housing starts dynamics typically lag the resale market by one to three quarters."

CMHC's outlook for economic factors is in line with the consensus of private-sector forecasters. Higher interest rates are not anticipated until mid-2014, reflecting expectations of a slower economy in 2013.

It said housing starts should decline in all provinces this year, while a modest rebound is expected in all provinces except in Atlantic Canada.

Ontario, P.E.I. and Saskatchewan was expected to face the steepest declines this year, falling by more than 21 per cent, while B.C., Alberta and Manitoba are expected to fare the best with declines of less than five per cent.

Average home prices are expected to outpace the rate of inflation this year in the Prairies, and Newfoundland and Labrador and be in line with inflation in 2014, except in P.E.I. and Quebec, which will see modest price growth.

Single-detached housing starts are relatively more stable than multiple-family units.

The CMHC forecast mirrors the outlook presented last week by the Canadian real estate industry, which said Canada's housing market is showing signs of stability ahead of a possible rebound in 2014.

The Canadian Real Estate Association — whose members operate the MLS system — said the number of homes sold so far this year is slightly higher than projected, although it still expects fewer sales this year than in 2012.

Douglas Porter, chief economist with BMO Capital Markets, said the figures presented CREA showed there been at least a delay in the doom and gloom that has been anticipated for the Canadian housing sector.

"Overall, this is relatively encouraging news," Porter said. "If anything, the surprise has been how healthy the housing market has been."

http://www.globalpost.com/dispatch/news/the-canadian-press/130625/housing-starts-will-regain-momentum-later-year-or-2014-cmhc-