The pace of new home construction in Alberta stayed strong in February at almost 55K housing starts* (seasonally adjusted annual rate) compared to 46K in January. This was the 19th month in a row that starts were over 40K. They hit the highest level ever at almost 61K back in November.

Unlike the 18% jump seen in Alberta,  month-over-month (m/m) starts in the rest of the country pulled back by 10%, with the numbers down in six of the ten provinces.

Over 90% of the starts in February were in either the Calgary (56%) or Edmonton CMA (35%).

Calgary’s starts increased by 44% over the January total while Edmonton’s grew at a more modest clip of 4%. Housing starts outside the two largest metros decreased by 26%.

Residential construction is expected to slow from the current pace, but remain strong as it catches up to rapid population growth in the province.

In the resale sector, inventory increased slightly in Alberta in February, but remained at historically low levels (see the chart below). At 2.6, the months of inventory** measure indicated that it was still a seller’s market in the province in February. The sales-to-listings ratio also points to a seller’s market at 0.68 last month.

The price of a benchmark*** home in Calgary fell for the second month in a row, down 0.5% in February. The Edmonton benchmark, meanwhile, rose for the 22nd month in a row, up 1.0% over January’s level.  

As we have discussed, more affordable housing markets are witnessing larger price gains across Canada and in Alberta. Alberta benchmark prices were up 4.8% in February over the same month last year, driven by a 12.2% jump in Edmonton vs. only 2.4% in Calgary.

At $580,600, the Calgary benchmark price was still higher than Edmonton’s $424,900, but the gap between the two cities continued to narrow. The national benchmark price fell by 0.8% in February to $712,400.  

*A housing start is defined as the beginning of construction work on the building where the dwelling unit will be located. This can be described in two ways: 1) the stage when the concrete has been poured for the whole of the footing around the structure; or 2) an equivalent stage where a basement will not be part of the structure.

**The number of months of inventory is the number of months it would take to sell current inventories at the current rate of sales activity. A reading below 3.6 months is considered a seller’s market; whereas a reading above 6.5 months is a buyer’s market.

***The Canadian Real Estate Association calculates the average price of benchmark homes in various markets (Calgary and Edmonton are the only Alberta markets on the list) using the MLS® Home Price Index (HPI). The HPI is based on the value home buyers assign to various housing attributes, which tend to evolve gradually over time. It therefore provides an “apples to apples” comparison of home prices across the entire country. Each month, the HPI uses more than 15 years of MLS® System data and sophisticated statistical models to define a “typical” home based on the features of homes that have been bought and sold. These benchmark homes are tracked across Canadian neighbourhoods and different types of houses.

Answer to the previous trivia question: On March 18, 1968, the U.S. Congress repealed the requirement for a gold reserve to back U.S. currency.

Today’s trivia question: In what year did 24 Sussex Drive become the official residence of the Prime Minister of Canada?