Winnipeg Free Press - PRINT EDITION

Q1 homebuilding drop dramatic

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The level of new home construction in Manitoba slowed dramatically in the first quarter of 2014, but industry officials say the slowdown is a by-product of bad weather, not the start of a major market correction.

In its latest monthly report Tuesday on housing starts, CMHC said there were only 180 new single- and multi-family starts last month in the Winnipeg Census Metropolitan Area (CMA), which includes Winnipeg and 10 neighbouring municipalities.

That's a drop of 65.5 per cent from the 515 recorded in March last year. It was the third straight month new home construction in the Winnipeg CMA lagged behind last year's pace, following drops of 19 per cent in January and 10.7 per cent in February.

The decline left starts for the Winnipeg CMA running 44 per cent behind last year's pace after the first three months of 2014 -- 500 units versus 891. Starts for Manitoba's seven largest urban centres combined were down 57 per cent to 59 units from 137.

Dianne Himbeault, CMHC's senior market analyst for Winnipeg, said new home construction was expected to be lower this year because of a buildup of unsold houses from 2013.

Though the unusually cold winter slowed activity even more than expected, the market fundamentals -- employment and population growth and mortgage rates -- remain positive, Himbeault said. So CMHC stands by its earlier forecast of a nine per cent decline in starts this year for Manitoba and a six per cent decline for the Winnipeg CMA.

Manitoba Home Builders' Association president Mike Moore also blamed the brutal winter for the weaker first-quarter numbers, saying it discouraged buyers from venturing out to show homes and buying.

"With January, February and March so horrible, I suspect a number of people said, 'OK, let's hold off for a month or two.' "

Now that spring has arrived, sales and starts should rebound, he said, noting builders he's talked to recently said traffic in the showrooms has started to pick up.

"If by the end of May or by mid-June the numbers haven't corrected themselves accordingly, then I'd say OK, maybe we have a pattern here," he said.

Last month's slowdown included an 86 per cent decline in multi-family starts -- 45 units versus 323 a year earlier -- and a 30 per cent drop in single-family starts -- 135 versus 192.

CMHC said the pace of housing starts also slowed last month nationally.

There were 10,781 starts, which extrapolated over 12 months produces a seasonally adjusted annual rate of 156,823 starts. That's down from 190,639 starts on the same adjusted basis in February.

The CMHC report was one of two housing-related reports released Tuesday. Royal LePage Real Estate Services' latest quarterly House Prices Survey showed good demand and a limited supply of desirable properties kept Winnipeg resale home prices climbing at a steady pace in the first quarter.

The average selling price for a standard condominium rose 5.3 per cent to $203,118 and the average price for a two-storey-home climbed 5.1 per cent to $325,072. For a detached bungalow, the increase was 1.2 per cent to $306,507.

"We have definitely seen a slow start to the year in Winnipeg," said Rick Preston, broker/owner with Royal LePage Dynamic Real Estate in Winnipeg. "Our inventory levels are up compared to last year, but buyers are being choosy."

Nationally, Royal LePage said most regions of the country showed healthy year-over-year price growth, with the average price of a home in Canada climbing between 2.5 per cent and 5.4 per cent.

murray.mcneill@freepress.mb.ca

Republished from the Winnipeg Free Press print edition April 9, 2014 B4

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