The latest residential construction indicators point to a sustained rise to start the year and the likelihood that housing will remain a strong growth sector for the provincial economy in 2016.

Urban BC housing starts in January came in at a seasonally adjusted annualized pace of 31,600 units. While backtracking 6% after a December surge, levels remained at the upper end of the range observed over the past year, and the underlying trend was positive. January’s decline was largely the result of fewer starts for apartments and townhomes in Metro Vancouver, but sharp fluctuations are the norm in the multi-family sector, given the size and scope of new projects in the region. In contrast, single-family housing starts increased in January and edged above a pace of 10,000 units for the first time since 2010 with gains in Metro Vancouver and the rest of the province.

Starts climbed 25% year-over-year, led by Metro Vancouver and Abbotsford-Mission.

Provincial starts (including rural markets) are tracking in line with our outlook for about 34,000 units for 2016 – a 9% gain from 2015. While there are challenges in the commodity-producing regions, higher momentum will gear off strong market conditions, a severe supply shortage and high prices in Metro Vancouver as developers respond with more projects. Similarly, we expect an increase in Vancouver Island markets due to strengthening resale conditions.

A likely pickup in new housing construction is evident in building-permit volume – a leading indicator of new home construction.

Dollar-volume residential permits jumped 15% from November to $931.7 million in December, up 43% from the same month in 2014, which pushed annual growth to 28%. While some of this filtered into January starts, high permit numbers point to further gains in housing and renovation, with increases predominantly coming in the multi-family sector, which climbed more than 50% month-to-month.

Residential activity was the principal driver in the growth of broader building construction, which climbed 18%. Metro Vancouver accounted for about 80% of the overall dollar-volume increase, but relative gains were strongest in Abbotsford-Mission (52%) and Kelowna (31%), with growth in Metro Vancouver and Victoria closer to 20%. •

Construction Points to Strong Housing Sector Gains in 2016 by Bryan Yu | Business in Vancouver