Canada: Housing Starts Remain Resilient

After a fairly lacklustre performance in December, housing starts bounced back in January. This rebound is hardly a surprise, and January’s data are in line with our forecast (237,000). While housing starts are lower than in November—when growth was abnormally strong—they’re still up from January 2024. Montreal saw the biggest jump in January, with 112% more housing starts than the year before. And Toronto’s numbers are actually down more than 40% from January 2024.

Once again, growth was supported by the multi-unit residential sector (graph), a segment that continues to demonstrate resilience. Housing starts for the single-family, semi-detached and row house segments were also up from January 2024.

While some factors External link. may give Canada’s residential construction a boost in 2025, including lower interest rates and stabilizing construction costs, we still expect housing starts to be somewhat modest in the year ahead. Housing starts should grow at a slower pace, albeit higher than the historical average. Construction will continue to be slowed by the skilled worker shortage, a lack of vacant land and zoning rules. The threatened trade war is also causing some uncertainty. If tariffs are imposed, construction costs could continue to rise in 2025. The list of US imports that would be subject to Canadian countertariffs includes some materials used in the construction industry, such as wood products, metals and paint. This could also put upward pressure on costs if Canadian substitutes can’t be found.