The phenomenal demand for new housing in Canada cooled only slightly in March as builders maintained their torrid pace in taking out residential building permits.

Contractors took out $2.4 billion in permits for housing in March, down 1.2% from the highest monthly record in February. Permits for single-family housing accounted for three-quarters of the total.

Housing permits reached $7.2 billion for the first three months of 2002, up 30.0% from the same period a year earlier. Nearly 53,000 new dwellings were authorized from January to March, the highest quarterly level since the first quarter of 1990.

The value of building permits, an early indicator of construction activity, points to a hot summer for home builders. The housing market has been booming across Canada in the wake of low mortgage rates, high consumer confidence and the scarcity of existing dwellings for rent or resale.

In contrast, the trend was still downward in the non-residential sector. Pulled down by a substantial drop in industrial permits, the value of non-residential permits fell 2.1% to $1.3 billion in March - the lowest level since April 2000. It was the sector's third decline in four months.

Municipalities issued $3.7 billion in building permits, down 1.5% from February. Despite the decline, this level was still 11.0% higher than the average monthly level in 2001.

Note to readers Unless otherwise stated, this release presents seasonally adjusted data, which ease comparisons by removing the effects of seasonal variations. The Building and Demolitions Permits Monthly Survey covers 2,350 municipalities representing 95% of the population. It provides an early indication of building activity. The communities representing the other 5% of the population are very small, and their levels of building activity have little impact on the total. The value of planned construction activities shown in this release excludes engineering projects (e.g., waterworks, sewers or culverts) and land.

Municipalities issued permits totalling $11.2 billion in the first quarter, up 11.2% from the same period last year. The massive gain in the residential sector contrasted with an 11.7% decline in non-residential permits.

Regionally, the census metropolitan areas of Edmonton and Calgary posted the largest gains (in dollars) in 2002 - mainly the result of proposed housing construction. All census metropolitan areas recorded increases in the value of residential permits on a year-to-date basis except Ottawa, which posted a record level last year.

Hot summer likely for home builders in most provinces

Builders took out $1.8 billion in single-family permits in March, down 0.6% from February. Despite this minor retreat, the level of construction intentions for single-family dwellings was still 34.3% higher than the average monthly level in 2001.

The value of building permits for multi-family dwellings fell 2.9% to $615 million in March.

After a record-setting February, housing permits in Alberta fell 9.6% to $381 million - the largest decline among the provinces in absolute dollars. In contrast, housing permits were at a 15-year high in March in Quebec, which posted the largest advance (+4.8% to $462 million).

On a year-to-date basis, all 10 provinces recorded double-digit advances in the residential sector compared with the same period in 2001. The largest increases (in dollars) occurred in Alberta (+56.4%) and Quebec (+45.7%).

Industrial and institutional sectors decline

The value of building permits in the non-residential sector declined in the wake of a sharp drop in industrial projects and a smaller decline in the institutional component.

The value of permits for industrial projects fell 35.7% to $197 million, largely because of a decrease in the utility and transportation category. This followed two sharp monthly increases. Ontario recorded the largest decline (-62.7% to $73 million) following a tremendous increase in February.

Institutional building intentions fell 6.5% to $375 million, the third straight monthly decline, as a gain in education projects was more than offset by retreats in welfare home projects. These three monthly declines follow a strong performance during the last six months of 2001. Manitoba recorded the largest decline after two strong increases.

Permits for proposed commercial construction jumped 18.4% to $695 million, driven by a strong gain in permits for hotel and restaurant and office building categories. This gain follows a large decline in February. Ontario recorded the largest advance.

At the provincial level, the most significant monthly decline occurred in Manitoba (-54.3% to $31 million). However, this decline should be put in perspective as a large permit was issued in February for a hospital. Alberta recorded the largest increase (+25.5% to $195 million) due to projects in the hotel and restaurant category.

Non-residential building permits totalled $4.0 billion in the first three months of 2002, down 11.7% compared with the same period a year earlier. The decline was a result of decreases in the industrial and commercial components. Industrial building permits dropped 28.9% to $752 million, while commercial intentions fell 19.0% to $2.1 billion. Only the institutional component recorded a higher level than the same period last year, up 28.6% to $1.2 billion.

The continuing downward trend in the non-residential sector is in line with some indicators. Declining industrial capacity utilization rates and corporate operating profits in 2001 may have hurt the sector.

Of the 28 census metropolitan areas, 16 showed a decrease on a year-to-date basis. The largest loss was in the Toronto area, due to a decline in proposed office building construction.

Provincially, Manitoba recorded the largest year-to-date increase (+59.1% to $131 million). The strongest drop was recorded in Quebec (-19.5% to $900 million), driven by declines in all three components in Montreal.