Canadian Building Permits Plummet 14% in December, Marking Lowest Level in Over Three Years

OTTAWA—Canadian building permit issuance witnessed a significant decline in December 2023, plunging to its lowest level in more than three years amidst ongoing concerns about pent-up housing demand in the country.

Canadian Building Permits Plummet 14% in December

According to Statistics Canada, the total value of building permits dropped by 14% from the previous month to a seasonally adjusted 9.25 billion Canadian dollars, equivalent to $6.83 billion, as reported on Tuesday.

The sharp downturn was notably weaker than the 2% increase anticipated by economists, noted TD Securities. December’s decline follows a 3.9% decrease in permits the previous month.

Statistics Canada attributed the decline in permits, reaching the lowest level since October 2020, to weakness in both the residential and non-residential sectors.

Key Insights:

  • On a year-over-year basis, the overall value of permits issued in December saw a 14.5% decline.
  • Despite possible signs of revival in Canada’s housing market, with existing home sales up 8.7% in December according to Canadian Real Estate Association data, overall sales for the year were down by 11%, marking the lowest level of annual activity since 2008.
  • Construction intentions in the residential sector experienced a significant decline from the previous month, with permits decreasing by 17.9% to C$5.66 billion. Notably, permits for multifamily dwellings plummeted by 31.1%.
  • Nonresidential building permits also saw a decline, falling by 7.0% to C$3.59 billion, as reported by the agency.

Quarterly and Annual Performance:

  • The overall value of building permits in the final quarter of 2023 amounted to approximately C$31.3 billion, marking a 9% decrease from the previous quarter and a 1.7% decline compared to the same period in 2022. This marked the lowest value since the third quarter of 2021.
  • For the full year 2023, the value of building permits dropped by 2.3%, with rising material and labor costs inflating nominal permit valuations. On a constant-dollar basis, the value of building permits was down by 8.9% compared to 2022.

Stay updated on further developments in the Canadian construction sector and its impact on the economy.

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