April shows slower growth in new home prices

Last month, new home prices in Canada showed certain signs of a growth slowdown, as the numbers changed from average increase of 1.1% during the first three months of this year to only a 0.3% monthly gain, Statistics Canada.

Price growth from March to April was reported in 10 out of 27 census metropolitan areas (CMAs) studied by Statistics Canada. Meanwhile, home prices were down in one CMA and remained unchanged in the rest of the country.

Stable increases in construction costs, especially when it comes to labour and softwood lumber, have kept pushing up new real estate prices.

The trend was most vivid in the Prairies, with Regina showing the largest new home price gain by 1.7% in April.

“Compared with the Q1 2020, the number of properties under construction in the first quarter of this year rose by 46.6% in Saskatchewan. At the same time, employment in the construction industry was up by 8.7%. As a result, the industry has faced labour and material shortages, intensifying an upward pressure on construction costs in the province,” – StatCan noted.

Calgary and Ottawa also reported strong new home price increases of 1.6% and 1.5% respectfully, supported by the ongoing supply shortages.

In case of Ottawa, “despite the sales decline and listings gain, the inventory of active listings was still below the one-month level. If the market is balanced, it shows 4-6 months of inventory,” – StatCan added.

Montreal showed the only prices drop last month, with prices going down by 0.4% due to sales slowdown and active listings growth.