Canadian housing starts continue to hold up well, coming in at 261,000 annualized units in May, said Bank of Montreal (BMO).
That leaves the year-to-date average at 253,000 and is in line with 261,000 over the latest 12 months, noted the bank.
There's still plenty of churn below the surface, however, as markets adjust to prevailing conditions, pointed out BMO. Most notably, the combined condo and homeownership starts have plunged below 100,000 on a 12-month basis for the first time --excluding the Great Recession -- since 1999.
The gap has been filled by the sharp increase in purpose-built rental starts, to 116,000 over the past years, stated the bank.
Notably, the number of rentals under construction across Canadian census metropolitan areas of almost 200,000 now exceeds combined ownership/condo units under construction for the first time.
This gap will only widen in the years ahead as new condo starts have evaporated across some major cities, such as Toronto.
BMO continues to believe in two major takeaways: Rents, especially in smaller units, will be under pressure for some time yet. And, the quality single-family resale market will tighten up first, if for no other reason than increasing relative scarcity.