Housing starts in Canada jumped to their highest level in seven months, as the country's two largest provinces ramped up construction of apartments, single-family homes, and residential units, according to Bloomberg.

Construction began on an annualized 264,506 units in May, according to data released yesterday Monday by Canada Mortgage and Housing Corporation. This is a 9.7% increase from the previous month, exceeding economists' expectations in a Bloomberg survey.

Ontario and Quebec—the two most populated provinces in the country—led the increase in housing starts, rising by 18% and 67% respectively.

The rate of housing starts fell by 16% in British Columbia, the province located in the far west of Canada. Structurally, the number of single-family homes that began construction during the month changed very little, indicating that gains were concentrated in multi-unit constructions.

The federal government also announced billions of dollars in new loans and tax exemptions aimed at encouraging construction as housing affordability deteriorates. The chronic shortage of homes in the country has been exacerbated by an influx of temporary residents that has pushed population growth to one of the highest levels among developed countries.

Canada Mortgage and Housing Corporation estimates that Canada needs to build at least 3.5 million additional housing units by 2030 to restore affordability.

Bob Dugan, chief economist at Canada Mortgage and Housing Corporation, stated: “While this is good news for the housing supply, we expect downward pressures on new construction for the remainder of 2024.”