Prices for new housing showed the largest monthly increase in three years

The cost of new housing showed the largest monthly increase in more than three years in August due to higher prices for building materials.

According to Statistics Canada, its New Housing Price Index was up by 0.5%, marking the fourth consecutive monthly hike and the largest increase since May 2017.

The COVID-19 pandemic still affecting all sectors of Canadian life has had a strong influence on the real estate market, first freezing the resale market because of lockdowns and social distancing measures. However, the demand recovered with usually slower summer months reporting record sales. And this demand affects the new homes market, as well.

As a result of staying at home for a long time, homeowners decided to improve their homes, thus raising demand and prices for wood, drywall, wiring and tubing.

“As physical distancing measures are still here, certain homeowners chose to direct their summer vacation money towards renovations and home improvements,” – the report noted.

In addition to it, new home construction are also under the hit because of stronger demand for building materials. Suburban areas also face high demand, especially Oshawa, Ont., where new home prices were up by 1.8% in one month.

The index saw an annual gain y 2.1%, marking the largest number in more than two years.

Now, homebuilders expect the record high lumber prices in 2020, which will probably add an extra $5,000-$10,000 to the price of a single family house.

“In the nearest future, the lack of lumber and building supplies will remain because of higher homebuyer demand, the growing renovation activities in North America, and the consequences of restrained operations at sawmills earlier this year,” – the report says.