The cost of a new home in Canada has continued to rise for another month thanks to growing buyer demand in Alberta and higher construction expenses.
In its monthly New Housing Price Index (NHPI) report for February, Statistics Canada stated that new home prices across Canada grew 1.1 per cent month-to-month. This is an increase compared to January, when new housing prices climbed 0.9 per cent nationally from December.
Of the 27 census metropolitan areas (CMAs) analyzed in the report, prices increased in 18 communities and were unchanged in nine CMAs. By province, new home prices increased the most in Alberta at 3.3 per cent monthly, followed by 2.1 per cent in New Brunswick and 1.3 per cent in Quebec.
Compared to February 2021, new residential prices were up 10.9 per cent annually. The greatest yearly price increases were reported in Kitchener–Cambridge–Waterloo, Winnipeg and Windsor, where price growth between 25.1 per cent and 20.7 per cent was recorded.
The NHPI monitors selling price changes for new residential homes that are agreed upon between the contractor and the buyer at the time when the purchase contract is signed. The NHPI is applicable to new single-family homes, semi-detached residences and townhomes.
New and resale home prices rise in Alberta
In western Canada, a surge of demand in Alberta’s housing market is pushing new property prices upward.
In February, Calgary reported the largest monthly increase in new home prices, up 3.8 per cent. Between January and February, new listings of single-family detached homes increased as sales activity reached a record high according to the Calgary Real Estate Board.
“While new listings went up, Calgary had not seen housing market conditions this tight in over 15 years,” said the Statistics Canada report. “However, homes in this city remained relatively affordable compared with other cities in the country, encouraging migration from other provinces into Alberta. Both factors contributed to the upward price pressures of new and resale homes.”
Meanwhile in Edmonton, new home prices were up 2.7 per cent monthly as the CMA experienced notable increases in market activity and single-family detached home sales in February, as per the Realtors Association of Edmonton.
Construction costs keep trend upward
Building new homes in Canada continues to become pricier.
The cost of softwood lumber “once again saw large gains in market value,” following a 15 per cent price hike in January and another 31.8 per cent increase in December 2021. Price gains have also been noted for other common new construction home materials, including furniture and fixtures, cement, glass and non-metallic mineral products.
According to Statistic Canada’s most recent Industrial Product Price Index (IPPI), Canadian manufactured products were up three per cent monthly in January. Compared to the same month in 2021, prices for softwood lumber were up 27 per cent yearly in January.
“The gain in this group was mostly driven by strong demand for wood for residential construction in the United States and Canada, combined with limited supply and major supply chain constraints,” said Statistics Canada.
