By Paul Vieira


OTTAWA--Canadian housing starts rebounded in December after a surprise decline in the prior month, but ended the year down from 2022 - at a time when the deficit of housing units is at or near record lows.

Housing starts across Canada came in at a seasonally adjusted annual rate of 249,255 units in December, an 18% increase from the month before, Canada Mortgage and Housing Corp. said Tuesday. Market expectations pegged a rebound in starts to 247,500, according to economists at Bank of Nova Scotia.

For 2023, actual housing starts fell 7% to 223,513 units from the prior year, and the federal housing agency attributed the weakness to a sharp dropoff in construction of single-detached homes.

The results emerge as Canada faces an acute housing shortage, in part due to some of the fastest population growth in the world. Housing affordability in Canada in the third quarter of 2023 is at its worst level since 1982, according to Bank of Canada data.

Based on estimated fourth-quarter Statistics Canada data, Canada's population rose 3.2% from a year ago, or five times higher than the average among members of the Organization for Economic Co-operation and Development.

In a report this week, National Bank Financial said the housing-supply deficit in Canada has reached a new record, of one housing start for every 4.2 people entering the working-age population, or between 15 and 64. Canada's historical average on this front is 1.8.

CMHC economists have estimated the country needs 3.5 million additional units, on top of what is under consideration, by 2030 to bring housing to affordable levels-defined as requiring less than a third of pretax income to afford an abode. BMO Capital Markets estimated that based on current demographic trends, Canada would require an additional 170,000 residences every three months, or 680,000 a year, to accommodate new households.

According to CMHC's December housing starts data, the trend measure - a six-month moving average of the monthly seasonally adjusted annual rate of housing starts - fell 2.1% to 249,898 units.


Write to Paul Vieira at paul.vieira@wsj.com


(END) Dow Jones Newswires

01-16-24 0900ET