OTTAWA—Canadian building permit issuance witnessed a significant decline in the final month of 2023, hitting its lowest level in more than three years amid concerns surrounding pent-up demand for housing in the country.
The total value of building permits plummeted by 14% from the previous month to a seasonally adjusted 9.25 billion Canadian dollars, equivalent to $6.83 billion, as reported by Statistics Canada on Tuesday.
The sharp drop was notably weaker than the 2% increase anticipated by economists, according to TD Securities. December’s decline follows a 3.9% fall in permits observed in the previous month.
Statistics Canada attributed the decline in permits to its lowest level since October 2020 to weaknesses in both residential and non-residential sectors. On a year-over-year basis, the overall value of permits issued in December witnessed a decrease of 14.5%.
Impact on Construction Activity
Building permits serve as an early indicator of construction activity in Canada, drawing from a survey of 2,400 municipalities representing 95% of the country’s population. However, the issuance of a permit does not guarantee imminent construction.
Despite signs of activity in Canada’s housing market, including a rise in existing home sales, construction intentions in the residential sector notably decreased in December. Permits for multifamily dwellings experienced a significant decline, while intentions for single-family homes saw a slight increase.
Quarter and Annual Trends
The overall value of building permits in the final quarter of 2023 experienced a notable decline of 9% from the previous quarter and a 1.7% decrease compared to the same period in 2022. Single-family homes were the only segment to witness a quarterly increase.
For the entirety of 2023, the value of building permits experienced a decline of 2.3%, albeit nominal permit valuations were inflated due to rising material and labor costs. On a constant-dollar basis, the value of building permits saw a more significant decrease of 8.9% compared to 2022.