Residential Construction Going Strong Despite Challenges: Results from Canada’s First Housing Market Index Release
OTTAWA – AUGUST 3, 2021 – The Canadian Home Builders’ Association (CHBA) released today a ground-breaking Canadian research and economics product. CHBA’s Housing Market Index (HMI) is a residential construction industry sentiments indicator for both the single-family and multi-family markets in Canada. This informative product provides a much-needed leading indicator about the current and future health of the residential construction industry in Canada. It is the only sentiments indicator for the sector in the country and has been modelled on the very successful and influential American version delivered by the National Association of Home Builders’, which is used regularly by financial analysts, the Federal Reserve, policymakers, economic analysts, and the news media. Through this new CHBA Housing Market Index, CHBA is looking to do the same for Canada.
The CHBA HMI will be released on a quarterly basis, providing a regular litmus test for the residential construction industry, which is one of Canada’s largest employers and whose health is critical to the overall Canadian economy.
While the HMI is being publicly released for the first time this quarter, data was collected for both the Q1 and Q2 quarters, and industry sentiment has been strong in the first half of the year. The 2021 Q2 HMI for single-family builders is 82.9 and the multi-family HMI is 83.9. Given the HMI uses a 100-point scale, this is a high sentiment number, reflecting strong builder confidence in the coming months, likely a result of a rebounding economy and the rollout of the vaccines this year. As a comparator, NAHB’s single-family HMI (which is similar to CHBA’s) hit 90, a record high, in November 2020. It came down to 83 on average in Q1 as lumber and other supply issues. 90 is the highest NAHB HMI score since NAHB started collecting this data in 1985.
Comparing Q2 to Q1, the single-family market has dipped slightly from 83.2 but remains extremely positive. The small change is indicative of a slight leveling out of sales after the spring rush, and a reflection of ongoing challenges with building material availability. The multi-family market has risen 2.3 points since Q1, which can be attributed to a rebounding multi-family market after a slowdown during the pandemic. Multi-family homes consist of stacked townhouses, duplexes, triplexes, double duplexes and row duplexes, and low and high-rise apartment buildings.
To deliver the HMI, CHBA surveys an exclusive expert panel made up of builders from across Canada that reflect market conditions across the country. Panel participants are asked to rate market conditions for the sale of new homes at the present time and in the next six months as well as the traffic of prospective buyers of new homes. HMI numbers are not seasonally adjusted. Over time as more data is collected, the HMI will indicate trends in the market and will likely be able to predict housing starts six months in the future.
CHBA will also occasionally use the HMI survey to collect timely information on pressing industry issues, such as the recent lumber and building materials pricing and supply challenges which continue to impact builders and homebuyers across the country. For example, as high material prices and shortages challenge the industry, 80 percent of builders reported increases in lumber costs over $20,000 per house, with 30 percent indicating increases over $40,000. Products and materials other than lumber have also been on the rise, with 42 percent of builders reporting construction cost increases over $20,000, over and above lumber.
For more information on CHBA’s HMI, including the detailed methodology and key takeaways, please visit the official CHBA HMI webpage.
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MEDIA INQUIRIES
Journalists wishing to interview Kevin Lee, Chief Executive Officer of the Canadian Home Builders’ Association are encouraged to submit their request by email to media@chba.ca.
ABOUT THE CANADIAN HOME BUILDERS' ASSOCIATION
Since 1943, the Canadian Home Builders' Association (CHBA) has been "the voice of Canada's residential construction industry." Representing one of the largest industry sectors in Canada, our membership is made up of some 9,000 companies – including home builders, renovators, land developers, trade contractors, product and material manufacturers, building product suppliers, lending institutions, insurance providers, and service professionals.