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Housing Market Index

Are you a builder interested in being part of the HMI panel of respondents?

Single-Family
(includes single detached homes, semi-detached homes and row (townhouse) homes)

HMI-2024-Q2-SF-Sized

Multi-Family
(includes stacked townhouses, duplexes, triplexes, double duplexes and row duplexes, and low and high-rise apartment buildings)

HMI-2024-Q2-MF-Sized

Properties of the HMI

(i.e. how to read the number)

  • The HMI is on a scale of 0 to 100
  • It's 0 only when everyone says conditions are "poor"
  • It's 100 only when everyone says conditions are "good"
  • It's 50 when the % saying "good" = the % saying "poor"

2024 Q2 HMI

This page outlines the Q2 2024 results for the CHBA Housing Market Index (HMI). This informative research and economics product provides a much-needed leading indicator about the current and future health of the residential construction industry in Canada. The HMI is a sentiment indicator, assessing current selling conditions, expectations for selling conditions over the next six months, and the level of sales office traffic (or other measures of prospective buyer interest), and as such is a proven indicator of housing starts that can be expected in six months and beyond.  

The data for the CHBA HMI comes from a panel of CHBA homebuilders and developers from coast to coast. Every quarter, this panel – which is created in collaboration with our local and provincial home builders’ associations across Canada – responds to a series of questions about market conditions. CHBA then uses proprietary statistical analysis to prepare the quarterly HMI. In addition to the standard HMI questions, each quarter CHBA asks “special questions” that allow the Association to gather data and insights into current issues affecting the industry across the country. 

CHBA’s HMI was modelled on the National Association of Home Builders’ (NAHB) very successful and influential US version. The NAHB version is used regularly by financial analysts, the Federal Reserve, policymakers, economic analysts, and the news media, given the importance of the health of the residential construction industry to the overall economy. Through the CHBA HMI, CHBA has done the same for Canada, where it is being used and followed by similar Canadian agencies (e.g. Bank of Canada, Statistics Canada), government policymakers, economists/analysts and media. 

If you have any questions or feedback about the CHBA HMI, please contact hmi@chba.ca

Summary for Q2 2024 HMI

Builder sentiment retrenches given a weak spring season and an increasing regional divide 

CHBA’s single-family and multi-family Housing Market Index (HMI) continue to reflect broadly negative views about the health of new home sales. The single-family HMI recorded a score of 29.9 (out of 100), which is 5 points lower than in the previous quarter and 10 points lower than in Q2 2023. The second quarter 2024 multi-family HMI score is 32.5, which is 5.4 points lower than in the previous quarter and 8.5 points lower than Q2 from a year ago. These latest results indicate that builder sentiment has been downbeat for two full years. Given the differences in building timelines, and the reliance on sales for builders to secure financing, this means that the full effects of the interest-rate-driven sales slowdown have yet to be felt in housing start numbers.   

There are regional differences in builder sentiment which have continued for over a year, since the fourth quarter of 2022—when both single- and multi-family indices hit their respective lows up to that point. Builders’ sentiment in Ontario and British Columbia for both single- and multi-family buildings furthered their downtrend, reaching new record lows in the second quarter of 2024. For Ontario, record lows of 11.6 for both the single- and multi-family HMI point to severe drops in housing starts ahead, and a worsening deficit in housing supply. British Columbia is not faring much better, with a single-family HMI of 17.8 and a multi-family HMI of 32.5.   

Builder sentiment in prairie provinces maintained a general positive trend, starting from an extremely low HMI score at the end of 2022, and now in positive HMI territory—above a score of 50. Builders in Atlantic provinces have maintained modestly positive sentiment over 50 throughout the past 18 months. 

The reasons for this regional divergence in sentiment are complex but mostly reflect regional affordability conditions. Housing starts are dropping where housing is most needed, which also coincides with where houses are most expensive, keeping would-be buyers locked out. Related to this, for various reasons, including housing costs, the net interprovincial migration rate has sharply fallen in British Columbia and has fallen further negative in Ontario—Canadians are leaving these provinces. The opposite is broadly seen in prairie and Atlantic provinces. The main concern regarding builder sentiment and future housing starts is that sales conditions are most dire where the highest quantity of new supply is needed.   

The survey was conducted after the June 5th policy rate cut from the Bank of Canada and before the July cut. Only about one quarter of builders polled stated that this lifted their expectations for near-future sales. Most builders felt that more policy rate reductions and/or more time is needed before they raise their outlook on future sales. This finding underscores the fact that higher interest rates and restrictive mortgage rules will continue for the foreseeable future, while both hard and soft construction costs will continue to climb. This means that affordability of new homes is unlikely to change rapidly, restricting the pool of well qualified buyers. 

There is also some divergence between low HMI scores in 2023 and annualized housing starts in 2024 so far. The HMI does not reflect the state of purpose-built rental developments—as they are not sold but are included in housing starts. As of the end of Q2, year-over-year housing starts (in centres with a population over 50,000 people) were up for purpose-built rental, but down for the combination of freehold and strata units (i.e. houses and condos for sale/ownership). This means that in housing starts right now, Canada is trading off housing units for rent rather than to own, and not getting much more overall supply, reflecting the challenges with affordability and homeownership. And very problematic is that urban starts overall are down 15% in Ontario and 7% in British Columbia year to date—the two provinces most in need of more supply, with the HMI indicating this will continue. 

While the increase in rental stock is a positive step, which CHBA lauds, it is not a positive picture overall when it comes instead of housing for ownership, which is also needed in large volume. It is only by enabling young and new Canadians to enter homeownership that we can move towards increasing housing supply dramatically, as is required to close the 3.5 million housing supply gap identified and reaffirmed by the Canada Mortgage and Housing Corporation. We need policies that support more rental and more ownership units to restore affordability.   

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