Housing Price Index and New Housing Starts Data Paints a Vivid Picture of the Construction Industry in Western Canada
The monthly Canadian New Housing Price Index data was released today and showed a 0.1% increase, which was above the forecasted 0.0%. This is the first increase since January of this year, which has seen a flat market so far, even decreasing slightly at -0.2% in April’s release.
Conversely, overall Housing Starts were down, figures released today from the CMHC showing 206,000 starts compared to a forecasted 220,000. Over the past 12 months this figure has largely surpassed expectations, with only 4 of the past 12 months falling below forecasted figures.
CMHC’s chief economist, Bob Dugan, said:
“Despite decreasing in July, the trend remains well-above historical averages, reflecting elevated levels of multi-unit starts in most major markets that has more-than-offset declining single starts.”
Alessia Pagliaroli, Goldbeck’s recruiter responsible for construction industry management, sales and marketing placements, weighed in on the results:
Looking at this construction data from an economics perspective, rather than affordability, we see how this data reflects the health of an industry that is a key component to Canada’s overall economic health.
We are seeing Alberta starting to show signs of growth activity again, however much of our focus is largely on Western Canada and the Greater Vancouver area, which has been really active. The busiest sectors we’re seeing is in building materials, where advancements in product efficiencies has been driving growth within these organizations. As districts require higher levels of residential energy reduction and efficiency, businesses have been working to develop new technologies that in turn create opportunities for specialist roles in both technical and sales departments.
The other area of strong growth within the burgeoning residential construction industry is in luxury builds. The world has watched Vancouver’s market specifically as it struggles with the reality of high end home builds and investment, and now we’re seeing smaller businesses catching up with new techniques for discerning clientele. Luxury builds require different architectural teams, new jargon, systems and approaches, and this is again creating opportunities for technical and sales people that specialize in this area to grow along with the market.
Another issue unique to the Vancouver Area is how the cost of living is growing faster than average wages, creating a gap that hiring managers aren’t always ready for. For example, jobs that have a low base salary and high commission opportunity aren’t as attractive to job seekers today as they work to provide stability and risk minimization for their families. Something to keep in mind for hiring manager’s forward planning.
What are Housing Starts and New Housing Price Indexes Looking At
Housing Starts data is issued monthly by the Canada Mortgage and Housing Corporation (CMHC) and is a “leading indicator of economic health because building construction produces a wide-reaching ripple effect. For example, jobs are created for the construction workers, subcontractors and inspectors are hired, and various construction services are purchased by the builder” Forex Factory
The New Housing Price Index (NHPI) data is important as well. It avoids fluctuating resale values and overheated markets to look at the economic engine of new home builds. “It’s a leading indicator of the housing industry’s health because rising house prices attract investors and spur industry activity” Forex Factory
Further Reading on Construction Industry Forecasting and Data:
Buildforce – a national industry-led organization working with the construction industry to provide information and resources – has an interesting perspective in their heavily researched report analyzing the residential construction market in Canada over the decade from 2015 through to 2024. Here’s a synopsis to the full report, which you can find online here.
Over the 2015–2024 scenario period, lower population growth and an aging workforce will impact the housing industry. Lower population growth will keep housing starts in the historical average range, with growth early in the period. As starts slow later in the period, renovation work is projected to rise in most regions. While the decline in new home construction may reduce employment in some cases, an aging workforce will increase the pace of retirements in the residential construction workforce, which adds to labour market challenges. On balance, the need to replace retiring skilled workers will dominate the hiring needs for many residential employers.