According to Statistics Canada, new home prices for Canada were up 0.5 percent in May compared with April, following a 0.3 percent rise in the previous month. Prices were up in 14 of the 27 census metropolitan areas (CMA) surveyed and unchanged in the other half.
The price of new homes continued to rise in May due to sustained increased construction costs. On a year-over-year basis, a drop in lumber and other wood product prices (-19.3 percent) was not enough to offset the rising costs of other building materials in May. The price for energy and petroleum products was up 78.5 percent compared with May 2021, fabricated metal products and construction materials (+23.2 percent) as well as cement, glass, and other non-metallic mineral products (+8.7 percent) also recorded increases over the same period.
The Bank of Canada raised its overnight rate in March and in April, causing potential buyers to face higher mortgage rates. Following these rate hikes, the Canadian Real Estate Association (CREA) noted that the resale market showed signs of cooling, as national home sales decreased by 8.6 percent in May compared with April. Nationally, the benchmark price for resale homes decreased 0.8 percent on a month-over-month basis.
In May, rising construction costs continued to push new home prices up. However, the increasing mortgage rates seem to have had a larger impact on the resale market than on the new build market, reducing demand and prices of resale properties.
Nationally, new home prices rose 8.4 percent year-over-year in May, the smallest increase since March 2021. Calgary (+18.9 percent) reported the greatest year-over-year increase in May. The last time Calgary led the national index was in January 2007. New home prices also increased in Winnipeg (+17.0 percent) and in Kitchener–Cambridge–Waterloo (+14.2 percent).