New Home Prices Remain Elevated Despite Broader Real Estate Market Slowdown
Despite what appears to be a sign of moderation in real estate markets across Canada, the price of new homes remains elevated, as year-over-year gains in key regions once again reached record-highs.
According to Statistics Canada, new home prices rose 0.6% in June, marking the lowest month-over-month increase in six months. However, when compared to the same period in 2020, the new housing price index stood at a near record-high, rising by 11.9% year-over-year. On an annual basis, home prices were up across all 27 of the CMAs, as the Kitchener–Cambridge–Waterloo, Ottawa, Windsor, and Montreal regions reported the sharpest annual price increases on records that date back to 1981.
Despite the ongoing acceleration in the price of new housing, the broader real estate market has shown signs of moderating over the past several months. According to the Canadian Real Estate Association, new listings decreased 0.7% in June, marking the third consecutive month of declines. Similarly, sales activity receded across 92% of all local markets from the previous month, causing the number of sales to fall faster than the number of available listings.
As Statistics Canada notes, the current market slowdown is likely due to what appears to be buyer fatigue, as less and less potential homebuyers refrain from engaging in bidding wars. In addition, the demand to purchase a home may be subsiding, as the lifting of Covid-19 restrictions are prompting those working from home to return to the office.
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.
