OTTAWA – There are more signs that the Canadian housing market is losing steam, with data showing new building permits hitting their lowest point since January 2012 — suggesting builders have slowed their construction plans.
Statistics Canada said Thursday that municipalities issued building permits worth $6.2 billion in November, down 17.9 per cent from October, a much steeper drop than the 7.6 per cent month-to-month decline economists had been expecting.
The value of permits in the residential sector fell 6.8 per cent to $3.8 billion in November, following a 4.4 per cent decline in October, the agency said.
Royal Bank economist Robert Hogue noted the drop in building permits was in line with a CMHC report Wednesday that housing starts slipped in December to an annual seasonally adjusted rate of 197,976 units.
“The new home construction side is starting to cool a bit,” Hogue said.
“We think that the peak in starts is now most likely behind us and so we’re into a continued softening in new starts going forward.”
Hogue will be watching the release of December home re-sales data next week to gauge the momentum of the cooling.
The local real estate boards in Vancouver and Toronto have already reported sharply lower sales for December compared with a year ago.
In Vancouver, December sales of previously owned homes were down 31.1 per cent compared with a year ago, while Toronto reported a 19.5 per cent drop.
CIBC economist Emanuella Enenajor noted the housing market contributed just under half a percentage point to economic growth in 2012, but said it will be a slight drag this year.
“So you’re getting a substantial swing in the contribution of the home building sector to the economy,” she said.
“What that means is we need other sectors to make up for the slowing housing construction.”
Building permits in non-residential sector fell 30.6 per cent in November to $2.4 billion, following a 53.6 per cent increase the previous month.
Construction intentions fell in seven provinces in November, with Ontario posting the largest decline, followed by Quebec and Saskatchewan.
Statistics Canada also reported Thursday that its new-house price index rose 0.1 per cent in November, following a 0.2 per cent increase in October, driven by the combined metropolitan region of Toronto and Oshawa, Ont.
The largest monthly price advance in November occurred in London, where prices were up 0.6 per cent, followed by Halifax and St. Catharines–Niagara, which recorded a 0.5 per cent increase.
Prices were down 0.5 per cent in Victoria and 0.4 per cent in Vancouver.
On a year-over-year basis, the index rose 2.2 per cent in the 12 months to November, following a 2.4 per cent increase the previous month.