New home construction slowed during April

Winnipeg home builders are still filling orders from last year, but activity this year is expected to slow down, according to Canada Mortgage and Housing Corporation.

CMHC said new home sales have been slow to rebound in 2009.

“The prospect of continued year-over-year declines in starts activity later in the year is increasing as builders have been unable to replenish their order books while completing last year’s contracts,” said CMHC senior market analyst Jeff Powell.

Despite the expected slow-down, Statistics Canada reported that the Winnipeg new home price index actually increased from March 2008 to March 2009 by 4.1 per cent, bucking a national price decline of 2.4 per cent. 

In neighbouring Saskatchewan, the Saskatoon new home price index fell by 11.2 per cent. In Edmonton, the decline was 12.3 per cent and in Calgary the new home price index dropped by 8.3 per cent.

New home construction in the Winnipeg Census Metropolitan Area — city and surrounding municipalities — was down 38 per cent in April with only 116 single-detached homes started. 

CMHC said new home construction in the rural municipalities surrounding Winnipeg, which had captured an increasing share of total starts in 2008, has remained at low levels in 2009.

Ritchot, St. Clements and East St. Paul, three of the RMs hardest hit by flooding this spring, recorded one, three and two starts, respectively, in April. In 2008, the same RMs respectively  recorded 41, 68 and 53 starts.

In the city of Winnipeg, construction of single-detached homes stood at 88 units by the end of April versus the 149 units started in the same month in 2009.

Meanwhile, there were 11 multiple-family starts — semi-detached, rowhouses and apartments — underway in April throughout the Winnipeg CMA, a decline of 59 per cent from the same month in 2008. All 11 starts occurred in the city. While there were no starts outside the city, a total of 37 units had been under construction in April 2008.

Total housing starts — combining single-family and multiple-family units — fell from 275 units in April 2008 to 127 in April this year throughout the Winnipeg CMA, which represents a 54.2 per cent decline.

Across Canada, CMHC said new home construction is unlikely to match the pace set over the last seven years, which exceeded 200,000 units per year.

“Housing starts will be more closely aligned to demographic demand,” according to CMHC, “which is currently estimated at about 175,000 units per year.”

“The decrease in April’s housing starts (nationally) is partly attributable to the volatile multiple starts segment,” said Bob Dugan, chief economist at CMHC’s Market Analysis Centre. “Most of the decline has occurred in the condominium segment in Ontario.”