Canada Mortgage and Housing Corporation

Canada Mortgage and Housing Corporation

May 18, 2016 08:15 ET

Saskatoon Housing Starts to Moderate in 2016, Edge Higher in 2017

SASKATOON, SASKATCHEWAN--(Marketwired - May 18, 2016) - According to Canada Mortgage and Housing Corporation's (CMHC) Spring 2016 Saskatoon Housing Market Outlook released today, total housing starts in the Saskatoon Census Metropolitan Area (CMA) are projected to range between 1,690 and 2,010 units in 2016 and between 1,780 and 2,130 units in 2017.

"The combination of weak labour market conditions, elevated new home inventory and increasing supply in the resale market will constrain housing starts in Saskatoon this year. In 2017, a gradual improvement in economic conditions will support slightly higher new home construction, as inventory levels are drawn down and housing demand modestly improves", said Goodson Mwale, CMHC's Senior Market Analyst for Saskatchewan.

In 2016, single-detached starts in Saskatoon are forecast to range from 900 to 1,000 units and from 930 to 1,030 units in 2017. "This year, builders of single-detached homes in Saskatoon continue to face competition from lower-priced options in the multi-unit sector that are geared more towards first time homebuyers. As well, supply in the resale market remains elevated. That said, a slightly improved economic outlook, along with further depletion of inventory, should result in single-detached starts edging higher by 2017," said Mwale.

Following a 34 per cent decline to 1,293 units in 2015, multi-unit starts are forecast to range from 720 to 1,080 units in 2016 and from 780 to 1,170 units in 2017. "Moderating economic conditions and elevated inventory, particularly among row and apartment units will constrain multi-unit starts in 2016, as builders delay new construction projects to accelerate absorption of completed and unsold units," added Mwale.

MLS® sales are forecast to range from 4,880 to 4,920 units and from 5,080 to 5,120 units in 2017. Lower global oil and uranium prices have slowed employment and income growth, while weaker labour market conditions have in turn resulted in fewer net migrants to Saskatoon. Together, these factors reduced resale demand in the past year, and are expected to continue to do so in 2016. Next year, improving economic conditions will result in slightly higher resale transactions.

Buyers' market conditions will continue to put downward pressure on resale prices in 2016 and in 2017. As a result, Saskatoon's average MLS® price is forecast to range from $339,600 to $343,400 in 2016 and from $344,000 to $348,000 in 2017. Slightly firmer resale demand will allow for modest gains in resale prices next year.

As Canada's authority on housing, CMHC contributes to the stability of the housing market and financial system, provides support for Canadians in housing need, and offers objective housing research and information to Canadian governments, consumers and the housing industry.

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