Builder sentiment across Canada remains bleak, with little hope for a near-term recovery, according to the Canadian Home Builders’ Association (CHBA) 2024 Q3 Housing Market Index (HMI).
The CHBA’s index showed single-family HMI dropped to 27.4, down 2.5 points from last quarter, while multi-family sentiment slid four points to 28.5 — both nearing the record lows seen in Q3 2023. Despite recent interest rate cuts, high fixed-rate mortgages continue to affect affordability, stalling sales activity in the new home market.
“The really low HMI scores, which show both low builder sentiment and an expectation of continued slower starts in the months ahead, emphasize the need for ongoing holistic change to policy at all levels of government to address affordability and supply,” CHBA CEO Kevin Lee said.
While Canada’s resale market is starting to show signs of life, with double-digit year-over-year sales increases in major cities like Toronto and Vancouver, the new home market continues to decline. Regional data shows new home builder sentiment is especially low in British Columbia and Ontario, with “effectively no builders experiencing good selling conditions” in the latter province.
Builder sentiment in the Prairies and Atlantic provinces, once cautiously optimistic, is now trending toward pessimism. In the Atlantic region, the only building category that remained positive was multi-family, though the sector accounts for less than five per cent of national starts.
The housing starts data paints a nuanced picture, with the total number of starts holding steady in 2024. However, starts specifically for ownership homes declined compared to last year.
“CHBA’s HMI relates only to new construction for ownership,” the report said. “While total housing start numbers, which include all types of construction such as rental properties, may be holding steady, the HMI focuses specifically on housing starts for homeownership… (for which) the report shows a 17 per cent decline through the first nine months of the year compared to 2023.
The CHBA urges a multi-pronged policy approach to tackle affordability and supply issues, with Lee stressing the need for comprehensive support: “While lower interest rates and other policy measures being implemented should eventually help increase sales activity, still more will be needed, including at the provincial and municipal level, to turn the market around and get on track to significantly increasing housing starts and supply in the future.”