Canada Mortgage and Housing Corporation

Canada Mortgage and Housing Corporation

May 25, 2015 08:15 ET

Weaker Fundamentals and Rising Inventory to Constrain Starts Through 2016

SASKATOON, SASKATCHEWAN--(Marketwired - May 25, 2015) - According to Canada Mortgage and Housing Corporation's (CMHC) Spring 2015 Saskatoon Housing Market Outlook released today, total housing starts in the Saskatoon Census Metropolitan Area (CMA) are forecast to decline 15 per cent from last year's performance to 3,000 units in 2015, before edging lower to 2,975 units in 2016.

"Weaker economic conditions created by lower oil prices will moderate employment growth and slow net migration to Saskatoon in 2015 and 2016. Combined with rising levels of new home inventory, these factors will constrain housing starts in Saskatoon throughout the forecast period as local home builders seek to meet new demand from their unsold units," said Goodson Mwale, CMHC's Senior Market Analyst for Saskatchewan.

Builders of single-detached homes in the Saskatoon CMA are expected to initiate 9.6 per cent fewer units in 2015 as they deal with rising inventory levels in the midst of weaker housing demand. At a projected 1,425 units in 2015, single-detached starts will come in slightly above their 10-year average of 1,409, but significantly below their five-year average of 1,701 units. Barring any significant reductions to inventory, a similar level of single-detached starts is forecast for 2016.

After hitting a 32-year high of 1,954 units in 2014, multi-family starts in the Saskatoon CMA, which include semi-detached, row, and apartment units, are forecast to decline 19.4 per cent to 1,575 units in 2015. While there has been an increase in demand in the past year for lower-priced options such as condominium apartments, a slower pace of employment growth and lower net migration will moderate demand for multi-family dwelling types moving forward. This will lead to a reduction in multi-family starts to 1,550 units in 2016.

Saskatoon's MLS® sales are forecast to move lower in 2015, as downside risks posed by lower oil prices temper resale demand. This year, MLS® sales are forecast to decline to 5,500 units, down 8.3 per cent from 5,996 in 2014, and remain near this level at 5,560 units in 2016.

The shift to buyer's market conditions in the first quarter of 2015 will put downward pressure on the average resale price this year. Saskatoon's average MLS® price is forecast to decline to $338,700 in 2015 from $341,061 in 2014. A slight increase to $343,800 is projected for 2016 as market balance improves.

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.

For more information, visit www.cmhc.ca or call 1-800-668-2642. CMHC Market Analysis standard reports are also available free for download at www.cmhc.ca/housingmarketinformation.

Follow CMHC on Twitter @CMHC_ca

Additional data is available upon request

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Contact Information

  • Market Analysis Contact:
    Goodson Mwale, Senior Market Analyst
    (306) 975-4897
    gmwale@cmhc.ca

    Media Contact:
    Dan Toth, Public Affairs Advisor
    (403) 515-2976
    dtoth@cmhc.ca