Canada’s housing starts fell for a second consecutive month as the country’s construction shortfall continues.

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Builders started work on an annualized 240,229 units in April, according to data released Wednesday by the Canada Mortgage and Housing Corp., in line with expectations of economists in a Bloomberg survey.

The 0.8 per cent monthly drop brings the six-month moving average to 238,585 units, the weakest half-year stretch for home building since last June.

Construction was split between 53,900 single detached and 186,300 multiple units in April, CMHC says. Regionally, starts fell 0.8 per cent in Ontario, the country’s largest province. Quebec and British Columbia recorded declines of 13 per cent and 11 per cent respectively.

“The multi-unit volatility observed in Toronto, Vancouver and Montreal in recent months is unsurprising as we continue to see last year’s challenging borrowing conditions reflected in multi-unit housing starts numbers,” Bob Dugan, CMHC’s chief economist, said in the release. “We expect to see continued downward pressure in these large centers.”

The data show few signs that housing construction is ramping up in Canada, even as the federal government announces billions in new loans and tax breaks intended to encourage building. The country’s chronic shortage of homes has been further aggravated by an influx of temporary residents that has driven population growth to one of the highest levels in developed countries.

CMHC estimates Canada needs to build at least 3.5 million additional housing units by 2030 to restore affordability. Prime Minister Justin Trudeau has set a goal of doubling the pace of construction to build 3.9 million homes by 2031.

While there was a wave of supply in the existing housing market in April, that wasn’t the case in new building, Doug Porter, chief economist at Bank of Montreal, said in a report to investors.

“Despite the full-court press by policymakers to build, build, build, the reality on the ground is that housing starts continue to gradually ebb,” Porter said.

After hitting the highest level of starts on record for a two-year period in 2021 and 2022 — at nearly a 270,000 pace — starts simmered down to just over 240,000 last year, and will struggle to hit that mark in 2024, he pointed out.

“To put these figures in perspective, the building goals set out in this year’s federal budget implied an annual pace of construction of roughly double that rate — not going to happen,” Porter said.

Multiples remain by far the dominant form of starts, accounting for roughly three-quarters of new building in the past year, he added. “Because multiples take much longer to complete, this also suggests that new supply will not come riding to rescue for strained affordability soon.”

With assistance from Jay Zhao-Murray.

Bloomberg.com