According to Statistics Canada, new home prices for Canada rose 1.2 percent in March compared with February. Prices were up in 18 of the 27 census metropolitan areas (CMAs) surveyed and unchanged in 9 from February to March.
Most new home builders surveyed continued to cite rising construction costs as the main reason for price increases. Softwood lumber prices were still rising (+8.3 percent) on a monthly basis in February. At the same time, prices for energy and petroleum products rose by 10.0 percent in January and 8.5 percent in February, as reflected in higher transportation costs and in higher operational costs for heavy machinery.
Demand for new homes in more affordable population centers continues to be strong in March, despite looming interest rate hikes.
For the third month in a row, Calgary (+4.1 percent) registered the largest month-over-month increase for the price of new homes in March. According to the Calgary Real Estate Board, March saw the highest amount of sales ever recorded. Despite the increase in new listings, the overall inventory of resale homes remained low. This market favorable to sellers may have had an impact on the demand of new built homes as the low inventory levels on the resale market may have swayed some buyers towards the new home market, contributing to the rise of new homes prices over the last few months.
Winnipeg recorded the second highest increase of new home prices in March (+3.4 percent). According to the Winnipeg Real Estate Board, active listings had already begun to decline prior to 2020, when the demand started to outpace the new supply of homes coming onto the market.
Prices for new homes in Montréal (+3.2 percent) and in Sherbrooke (+3.1 percent) also increased in March. According to The Quebec Professional Association of Real Estate Brokers, both municipalities continued to experience inventory shortages for resale homes as of the fourth quarter of 2021.
Nationally, new home prices rose 11.0 percent year-over-year in March. Kitchener–Cambridge–Waterloo (+24.4 percent) reported the greatest year-over-year increase for the 7th month in a row in March. The second highest increase was observed in Winnipeg (+24.3 percent), the largest price increase in this CMA since the beginning of the series. In Calgary, its year-over-year increase (+23.0 percent) in March was the highest since the price of new homes surged during the housing market boom of 2006-2007.