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Canadian condo glut

Sept. 9, 2014, Ottawa — The trend measure of housing starts in Canada was 189,837 units in August compared to 189,596 in July, according to Canada Mortgage and Housing Corporation (CMHC). The trend is a six-month moving average of the monthly seasonally adjusted annual rates (SAAR) of housing starts.

"The currently elevated level of inventory of newly completed and unoccupied condominiums, and units under construction, supports CMHC's view that condominium starts will likely see a declining trend over the coming months as developers and builders seek to limit risks of over-building," said Bob Dugan, CMHC's Chief Economist. "However, there may still be some variability from month to month as the number of presales for some planned condominium projects reaches sufficient levels to trigger project start," added Dugan.

CMHC uses the trend measure as a complement to the monthly SAAR of housing starts to account for considerable swings in monthly estimates and obtain a more complete picture of the state of the housing market. In some situations analyzing only SAAR data can be misleading, as they are largely driven by the multiples segment of the markets which can be quite variable from one month to the next.

The standalone monthly SAAR was 192,368 units in August, down from 199,813 in July. The SAAR of urban starts decreased to 175,668 in August, from 182,524 in July. Multiple urban starts in August decreased to 110,842 units while the single-detached urban starts segment decreased to 64,826 units.

In August, the seasonally adjusted annual rate of urban starts decreased in Atlantic Canada and Ontario, and increased in British Columbia and the Prairies. Urban starts remained essentially unchanged in Quebec compared to July.