TD Sees Increased Risk That Housing Starts "Act As a Drag" On Residential Investment In Q1 GDP

09:52 AM EDT, 03/16/2026 (MT Newswires) -- As expected, housing starts increased last month after January's weather impacted print, TD Economics said Monday. But, it added, the bounce-back was "tepid."

TD also noted that so far in Q1 starts are down about 4%, not annualized, compared with their Q4 level, "boosting the risk that starts act as a drag on residential investment" in Q1 gross domestic product growth.

On a trend basis, TD noted starts have been "generally cooling" since September of last year. It thinks the pace of starts will continue to ease, impacted by weak population growth, high costs, elevated levels of unsold inventories, and "very weak" pre-sales activity in key markets like the Greater Toronto Area.

Recent decline in the number of residential permits issued is consistent with this view, TD added.

TD noted Canadian housing starts increased to 250,900 annualized units in February, up 4.5% month over month. This marked a slight bounce-back from January's 14% month-over-month decline. Meanwhile, the six-month moving average of starts increased 0.4% month over month to 256,000 units in February.

The bank noted February's increase was concentrated in the multi-family sector, with urban starts up 8% month over month to 192,300 units. Urban single-detached starts were down 8% month over month to 38,200 units.

Urban starts were up in five of 10 Canadian provinces, it also noted.

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