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Economic News

Canada: The Housing Market Is Gaining Strength

May 15, 2023
Hélène Bégin
Principal Economist


  • Canadian housing starts surged 22.3% in April to 261,559 units on an annualized basis. 
  • However, recent weakness means that the six‐month moving average remained close to 240,000 units.   
  • The biggest gains were in Atlantic Canada (+49.5%) and Ontario (+44.5%). British Columbia (+17.6%) and Quebec (+5.3%) rose less, while the Prairie provinces contracted 7.3% in April.
  • In the major metropolitan areas, Toronto (+54%), Montreal (+43%) and Vancouver (+36%) all posted sharp monthly increases thanks to strength in multi-family housing starts.   
  • Existing home sales spiked 11.3% in April after increasing much less in previous months.
  • Despite rising 1.6% in April, new listings remain at a 20-year low. As a result, the seller's market became even more pronounced.
  • National average prices surprised to the upside, rising 5.7% over last month. The Home Price Index was up 1.6% in April.


Against all expectations, Canadian housing starts rebounded sharply in April. The prevailing downtrend of the last few months reversed, raising a lot of questions. Will new construction still have some upside surprises in the coming months? Is the recent rebound in the resale market already putting pressure on housing starts? We believe this could be a temporary blip. High interest rates and construction costs are making financing difficult for some developers and builders, given that new home presales are down. In addition, despite some monthly volatility, the value of building permits issued by municipalities continues to decline.

The stronger resale market is largely being driven by a stunning rebound in sales in Ontario (+18.8%) and British Columbia (+15.7%). A roughly 20% price correction between February 2022 and January 2023 seems to have prompted buyers to move forward. In Quebec, prices dropped 7.3% from April 2022 to January 2023, while sales have been slowly rising for a few months, including 1.5% in April. 


This housing market rebound isn't good news for the Bank of Canada (BoC). The restrictive effect of past interest rate hikes isn't stopping the housing market from recovering well. The economic slowdown hasn't done enough to soften the labour market, and rapid population growth is just adding fuel to the housing market.