After an unusual spike in June, Alberta’s new housing starts are settling down to a level much more consistent with the long term trend. According to statistics complied by Canada Mortgage and Housing Corporation, there were 34,475 housing starts in the province last month. Since August of last year, housing starts have averaged just under 38,000 (annualized rate), about 8.2 per cent more than the 35,130 over the previous twelve-month period.
(The figure is seasonally adjusted to smooth out the predictable fluctuations in activity. It’s also reported at an annual rate: that is to say it represents the number of homes that would be started in one year if the pace of building was maintained for twelve months.)
The graph below shows the last three complete years of home building activity in Alberta. Generally speaking, housing starts have displayed a gradual but steady increase. The exception is June of 2014, a month in which starts jumped to an astonishing 53,853 (annualized rate).
It is difficult to explain this anomaly in the data. It could be an error in the survey or perhaps starts spiked this high due to a combination of random events. Whatever the case, June’s sudden and steep jump is a great example of why one month of data should never be considered in isolation. The return to normal building levels in July is a reassurance that housing construction in Alberta is increasing steadily but at a more sustainable pace than in June.
**Article courtesy of Todd Hirsch of ATB Financial. Thanks Todd!!