Analysis
May 10, 2014
Canadian Construction Growth Softening
Written by Sandy Williams
Building permit values in Canada decreased for the second consecutive month, falling 3 percent in March after an 11.3 percent decrease in February. Value of building permits totaled $6 billion. The decrease in building permit values surprised economists at Royal Bank of Canada who expected a 4 percent rebound in March. A plunge in non-residential sector permits more than offset a gain in the residential sector, according to data from Statistics Canada.
In the residential sector, building permits were authorized for 15,833 new dwellings, an increase of 12.2 percent from February. Multi-family units led the increase, jumping 21.2 percent to 10,191 units. Single family dwellings fell 1.2 percent to 5,642 units. The value of residential permits rose 1 percent to $3.7 billion after a steep decline of 20.8 percent in the previous month. Multi-family permit values reversed course after falling 30.7 percent in February, registering a 7.9 percent increase in March. Permit values for single family dwelling decreased for the fourth time in five months, sliding 3.6 percent to $2.1 billion.
Selling prices for new homes in Canada increased by 0.2 percent in March after climbing the same amount in February. The largest monthly gain was in the Calgary region where higher material and labor costs, market conditions and cost of developed land led to a 0.8 percent increase. Pricing in other metropolitan regions in Canada was mixed with higher prices reported in St. John’s, Halifax, Hamilton and Winnipeg and falling prices in five other metropolitan regions in March.
In the nonresidential sector, $2.3 billion of building permits were authorized in March, a decline of 8.8 percent, following a 7.4 increase in February. Institutional permit values fell 31.3 percent and commercial permit values rose 1.2 percent in March. Industrial permit values fell 7.7 percent after a 29.7 percent increase in February.
