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“Even if we assume activity runs about 15 per cent below pre-COVID trends through the rest of the year, the 2020 housing starts tally would come in around 190k — that’s meaningfully stronger than even the high end of some widely-publicized bearish forecasts out there,” said BMO senior economist Robert Kavcic.
Housing starts are just the latest economic indicator that has beat expectations over the past month, said RBC senior economist Nathan Janzen. He said the recovery will still likely be gradual, but “the recent near-term data flow has clearly been less discouraging than was expected even a few weeks ago.”
How the economy emerges from the crisis, however, still remains very uncertain and economists warn home construction’s resilience may not last. Sondhi said building permits dropped sharply in April and the prospect of “significantly” slower population growth because of the decline in immigration dims the outlook for homebuilding.
CIBC’s Royce Mendes said despite the more positive number, Canada’s housing market “is facing a number of headwinds from reduced immigration, curtailed short-term rental activity, and newly unveiled measures from CMHC to tighten lending standards.”