In preparing for a BNN interview earlier this week where I was to provide instant reaction to the monthly release of the housing starts statistics by Canada Mortgage and Housing Corporation, it occurred to me that homebuyers face a continuous barrage of statistical information that can be downright confusing at the best of times.
CMHC releases national, provincial and local reports on housing starts each month. At a different point each month, Statistics Canada issues data on building permits. Figures on resale home transactions are released twice a month by the Toronto Real Estate Board and monthly by the Canadian Real Estate Association.
As for new home sales, the Greater Toronto market is served by RealNet Canada Inc., which provides detailed monthly statistics to BILD for release to the public via the media.
That’s four potential housing market information sources you could be hearing about or reading about on any given day, and not surprisingly, they rarely align. For example, it’s not uncommon to see housing starts up locally, down province-wide and treading water nationally, but depending upon which report you catch, you could get a completely different perspective.
The most important thing to be aware of is which data source is being quoted and whether it’s a lagging or leading indicator. In a market like the GTA where the vast majority of new homes are pre-sold, the sale comes first, then the builder obtains a building permit, then the “start” construction.
While housing starts are a great indicator of future jobs and spending, they are telling you what was happening in the market three-six months ago in the case of low-rise housing and nine-15 months ago in the case of high-rise. In essence, housing starts offer a rearview mirror projection of the market.
My best advice to readers is not to get too hung up on monthly stats and if you’re going to follow anything, keep an eye on the RealNet new home sales stats as the leading indicator of local housing market activity.