New home prices continued their upward trajectory in March, following one of the largest monthly jumps on record in February.
On Thursday, Statistics Canada reported that new home prices across Canada jumped by 1.1% last month, as prices remained elevated in 23 of the 27 census metropolitan areas (CMAs). The largest monthly increase was noted in Charlottetown, where prices rose by 3.4%. Similarly, new home prices also continued their upward climb in Ottawa and St. Catharines-Niagara, both up by 3.2%.
Ongoing strong demand for new homes, coupled with low mortgage rates and employment flexibilities, have helped fuel the upward trajectory of prices in March. With many homeowners searching for more spacious homes, housing shortages have become evident; this has created competition between potential homebuyers, driving prices even higher in some regions.
On the housing supply side, rising construction costs and building material shortages have put added pressure on new home prices. Construction companies continue to face higher costs for a number of materials, including lumber, fabricated metal products, and cement and glass.
Last month also marked the one-year anniversary of nationwide Covid-19 restrictions in Canada. Earlier forecasts called for significant price declines across the real estate market, with most notably, the CMHC warning of an 18% drop before the end of 2020. However, quite the opposite has transpired. Price growth has accelerated rapidly across nearly all regions in Canada, as stay-at-home orders and work flexibility shifted housing demand from heavily-populated urban centres to suburban and rural areas.
Information for this briefing was found via Statistics Canada. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.