Posted by Moishe Alexander
CMHC forecasts total housing starts of 850 units in 2009 and 950 units in 2010. Expect 550 new single-detached homes to break ground in Regina this year, 44 per cent off the 22-year high of 979 units in 2008. Single-detached starts will rise to 600 units in 2010, a nine per cent lift from 2009.
Higher new home inventories and competition from the resale market have prompted builders to scale back construction this year. Demand for new homes is slower due to double- digit price growth in the past two years. Economic uncertainty has also played a role in reducing demand this year. With new home supply past its peak and inventory stabilizing by 2010, builders will drive production up by over nine per cent from 2009 levels. Stable prices, persistently low mortgage rates, and economic growth will also encourage the purchase of new homes.
Seeking to contain inventories, Regina builders started only 337 single-detached homes to the end of August, down 49 per cent from 2008 at this time. As a result, the level of single-detached units under construction declined 23 per cent compared to August 2008. Despite slower starts, the 677 singles under construction this August represent the second highest volume of single units underway for that month since 1984.
As demand has cooled and completions have picked-up, 44 completed single-detached homes remained unsold this August, 42 per cent more than one year prior and the highest August inventory of unsold units in eight years.
Given an average absorption rate of 70 singles per month, it will take the market about 10 months to deplete the 721 single-detached homes in supply this August. One year earlier, the 908 single-detached homes that were in supply could sustain the market for about 15 months, as it was absorbing an average of 60 single-detached units per month. Although market conditions are improving and moving toward balanced conditions, the market is still favouring buyers. Share of starts in