CMHC Reports a 14% Surge in February’s New Home Construction

In an uplifting revelation for the Canadian housing market, the Canada Mortgage and Housing Corp. (CMHC) announced a significant leap in new home construction for February, marking a 14 per cent increase from the preceding month.

This jump in housing starts, amounting to a seasonally adjusted annual rate of 253,468 units as opposed to January’s 223,176, surpassed the expectations of economists who had forecasted a figure closer to 230,000 units.

Analyzing the Surge in Housing Starts

Overview of February’s Housing Starts

The CMHC’s latest report showcases a buoyant housing construction scene, with February’s figures not only beating the previous month’s performance but also exceeding analysts’ predictions. This growth is particularly noteworthy against an 11 percent year-over-year increase in housing starts, propelled predominantly by a 16 percent rise in multi-unit projects like apartments and condos. Conversely, the construction of single-detached homes saw a decline of 14 percent.

Year-over-Year Growth

Delving deeper into the year-over-year growth, it’s evident that the increased activity in multi-unit residential construction largely drives the surge in housing starts. This uptick clearly indicates developers’ growing inclination towards catering to the housing needs within Canada’s bustling urban centers amidst a pronounced national housing shortage.

Factors Contributing to the Increase

Developer Focus Shifts

Bob Dugan, CMHC’s chief economist, underscored the shifting focus of developers towards multi-unit construction as a strategic response to the ongoing national housing shortage. This pivot is particularly pronounced in major urban centers, where the demand for housing continues to outstrip supply.

Regional Variances in Housing Starts

February’s housing shows stark regional variances, with adjusted starts soaring by 79 per cent in Vancouver while plummeting by 31 per cent in Montreal. These fluctuations highlight the impact of larger multi-unit developments on the housing construction landscape, underscoring the uneven pace of growth across different cities.

Role of Weather and Market Sentiments

The unusually mild winter weather has likely played a role in accelerating housing starts, offering construction projects an unexpected boon. Additionally, the housing market’s dynamics are being influenced by anticipatory sentiments regarding potential Bank of Canada rate cuts later in the year, fuelling optimism among developers and investors alike.

The Housing Market’s Response

Short-Term Fluctuations vs. Long-Term Trends

CMHC also analyses a six-month moving average of the adjusted rate to mitigate the month-to-month volatility in housing starts. February’s indicator, marking a slight 0.4 per cent increase from January to 245,665, offers a more stable lens through which to gauge the upcoming housing supply trend, suggesting a cautiously optimistic outlook.

Economic Perspectives on Housing Starts

Economists, including TD’s Rishi Sondhi, have expressed anticipation and caution in response to February’s figures. While the immediate bounce-back in starts was expected, the overall trend suggests a moderation in residential investment growth as the market adjusts to the ebbs and flows of demand and construction activity.

Implications for the Housing Market

Impact on Residential Investment Growth

The early months of the year signal some potential downward pressure on residential investment growth, with housing starts in the first quarter trailing behind the levels seen in the latter part of the previous year. Analysts, including those from TD Bank, anticipate continuing this downward trend as the market seeks equilibrium.

Potential Market Shifts

The housing market stands on the cusp of potential shifts, with anticipated Bank of Canada rate cuts poised to inject renewed vigor. Such policy moves could catalyze a resurgence of activity, drawing sidelined homebuyers back into the fray and potentially revitalizing the housing landscape.


The CMHC’s report on February’s new home construction paints a picture of a resilient housing market, capable of surpassing expectations amidst fluctuating economic indicators and policy landscapes. As developers and investors navigate the intricacies of supply and demand, the Canadian housing market remains a focal point of economic resilience and growth potential.