New home construction dropped 17% in October, says CMHC

The annual pace of housing starts, also known as new home construction, fell 17 per cent in October compared with September, the Canada Mortgage and Housing Corp. said Tuesday.

The national housing agency says the seasonally adjusted annual rate of housing starts was 232,765 units in October, down from 279,174 in September.

Tania Bourassa-Ochoa, CMHC's deputy chief economist, says the drop came as the number of starts in Ontario and British Columbia fell in October.

However, she noted that higher starts in markets like Montreal, Calgary and Edmonton helped keep the national year-to-date total elevated compared with the same period last year.

Actual housing starts in centres with a population of 10,000 or greater totalled 19,174 units in October, compared with 19,763 in October 2024, while the year-to-date total for centres with a population of 10,000 or greater was 197,207, up from 188,660 in the same period in 2024.

The six-month moving average of the seasonally adjusted annual rate of total housing starts was 268,907 in October, down from 277,081 in September.

"While these results are generally reflective of investment decisions made months or even years ago, they also highlight persistent and significant regional contrasts in housing construction trends across the country,” said Bourassa-Ochoa.

Rishi Sondhi, an economist at TD Economics, said that the October data shows that builders are starting new units "at a fairly healthy clip, supported by the purpose-built rental market."

"Notably, homebuilding in the rest of Canada is much stronger than in Ontario, as the latter is being weighed down by a retrenchment in condo construction," he wrote in a note.

Sondhi also said that the trends shown in the October data suggest there will be a further decline in new construction starts in the near-term.

"This is consistent with our view that homebuilding is likely to cool next year, as modest population growth weighs on rents, and weak pre-sales activity restrains starts in the ownership market," he wrote.