Friday, May 9, 2025

New-Home Prices Rise by Most in Three Decades

Canada’s real estate market continues to heat up in the new year, as prices for newly-built homes soared by the most in over three decades.

According to Statistics Canada’s latest New Housing Price Index print, new home prices rose by 1.9% last month— the fastest pace since February 1989. Nearly all regions across Canada recorded some form of increase, as prices were up in 22 of the 27 census metropolitan areas. On a year-over-year basis, home prices were up by 7%, marking the largest increase in more than a decade. Builders attributed the spike in prices to rising material and construction costs, as well as ongoing demand for more spacious homes.

The Canadian Home Builder’s Association calculated that the average cost of a typical 2,500-square-foot home was up by nearly $30,000 last year, as a result of increasing building material costs such as lumber and plywood. Softwood lumber prices have soared by 108% from year-ago levels— the second highest price increase in record, aside from a surge of 112.2% in January 2021.

The price of new homes have also been accelerating because historically-low interest rates continue to attract potential homebuyers to the real estate market. First-time home buyers, as well as those in search of more spacious living arrangements, continue to put added pressure on a housing market that is already significantly supply-constrained. Younger Canadians, especially those aged between 25 and 35, accounted for 12% of all property purchases amid the pandemic.

Going forward, new home prices will likely continue their upward trend, while also beginning to crowd potential homebuyers out of the market. Record-low borrowing rates combined with ongoing flexible work arrangements, rising building material costs, and reduced housing supply will put added pressure on new housing prices. These variables combined may soon become an obstacle for some potential homebuyers, as it will become less affordable to purchase a new home.


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.

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