Average cost of new real estate in Canada remains almost unchanged

The latest report by Statistics Canada shows that new home prices were down by 0.2% in January compared to December, while an annual comparison points to a 2.7% gain.

The main factor causing a slight decrease, according to the agency, are higher mortgage rates – the Bank of Canada key lending rate was raised to 4.5% recently. Residential property prices saw no changes or a decline in 25 of the 27 census metropolitan areas tracked by StatCan.

The report says 10 areas showed new home prices drop, marking the largest number since September 2018. The largest monthly decreases were reported in Winnipeg (1.3%), Victoria (1.1%), and the Kitchener-Cambridge-Waterloo area (0.9%).

“Mortgage rate increases have affected housing demand. The Canada Mortgage and Housing Corporation says there were 18.7% more single-family properties (single detached, semi-detached, and row) completed but not sold in December 2022 on a year-over-year basis,” – StatCan noted.

One more driver of the prices decline was the drop in softwood lumber costs by 61.2% since the peak reported in March 2022.

The national new-listings-to-sales ratio for residential units fell from 77.9 in January 2022 to 57.8 last month.