Statistics Canada reports divergent price trends in January
New home prices in Canada ticked slightly downwards by 0.2% monthly in January, markedly diverging from the annual increase of 2.7% seen during that month, according to the national statistics agency.
Statistics Canada cited higher mortgage rates, stemming from the central bank’s latest interest rate hike to 4.5%, as the main driver of downward pressure. Residential property prices went down, or remained essentially unchanged, in 25 of the 27 census metropolitan areas surveyed by the agency.
A total of 10 CMAs saw decreases in new home prices, the most since September 2018. The most significant monthly declines were seen in Winnipeg (down by 1.3%), followed by Victoria (down by 1.1%) and the Kitchener-Cambridge-Waterloo area (down by 0.9%).
“As mortgage rates have increased, housing demand has been impacted, with the Canada Mortgage and Housing Corporation reporting 18.7% more single-family homes (single detached, semi-detached, and row) completed but not sold (unabsorbed inventory) in December 2022 compared with the same month in 2021,” StatCan said in its report.
Another factor contributing to the lower prices was the decline in softwood lumber costs, which have dropped by a total of 61.2% since the highs seen in March 2022.
Nationally, the new-listings-to-sales ratio for residential units was at 57.8 in January, versus the 77.9 during the same time last year.
By province, Calgary registered the greatest annual increase in home prices in January (up by 10.9%), followed by Windsor (5.9%) and Quebec (5.3%).
However, StatCan stressed that these increases have moderated when compared with the markets’ performance in January 2022, when annual growth registered at 15.3% in Calgary, 21% in Windsor, and 10.2% in Quebec.
