Canadian new home prices rise 1.1 percent in March

Thursday, 22 April 2021 19:57:00 (GMT+3)   |   San Diego
       

According to Statistics Canada, new home prices rose 1.1 percent in March nationally, following one of the largest monthly increases on record in February.

New house prices in March were up in 23 of the 27 census metropolitan areas (CMAs) surveyed. Prices were unchanged in the remaining CMAs.

The largest monthly increase in new home prices was in Charlottetown (+3.4 percent), where house prices remained relatively affordable compared with other hot markets in Canada. During the last five years, Prince Edward Island showed the second highest population growth rate among the provinces and territories. Over the same period, this province has been experiencing high interprovincial migration, pushing up the demand for housing. In March, employment (+1.7 percent) continued to recover and unemployment fell by 1.1 percent.

The strong demand for new houses, fueled by lower borrowing costs and work from home restrictions, continued pushing up new home prices in March. As many home owners looked for larger living spaces, first-time home buyers also rushed to enter the market. Shortages of homes available on the market have also been creating competition between potential buyers, with some builders only releasing a few lots at a time.

On the supply side, increasing construction costs and shortages of construction materials also put upward pressure on new home prices. Builders continued to face higher costs for construction materials such as lumber and other wood products (+5.2 percent), fabricated metal products (+2.5 percent), cement and glass, and other non-metallic mineral products (+9.8 percent), which all increased on a monthly basis in February.

March 2021 marks the one-year anniversary of the implementation of COVID-19 restrictions in Canada. The early predictions anticipating a drop in housing prices did not materialize. In fact, the growth of prices has accelerated in most Canadian cities since the beginning of the pandemic. Continued work from home shifted the demand from large urban centers toward remote and more affordable markets, which offer larger single-family homes.

The 12-month change for March compares, for the last time, pre-pandemic prices with pandemic house prices, as the reference period for the March 2020 data ended on March 15. For the first time since December 2017, new home prices accelerated on a year-over-year basis in all 27 CMAs surveyed.


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