New home prices show signs market is cooling
By Heather Scoffield – Globe and Mail
Prices for new homes in Canada rose 0.2% in March from a month earlier, and 6.1% over the past year, Statistics Canada says.
The month-over-month increase was exactly as economists had predicted.
And the 6.1% year-over-year increase, slightly slower than the 6.2% rise noted in February, also vindicated expectations that housing prices in Canada are no longer rising quickly.
“This deceleration continues a downward trend that started in September, 2006, due mainly to the softening market in Alberta,” Statscan said.
The hottest market in the country, for the 11th straight month, was Saskatoon, where prices for new homes have soared 46.2% from a year ago. That’s down from the record-setting 58.3% seen in February.
On the month, Saskatoon prices rose 2.1%.
Regina’s new homes rose 27.8% from a year ago, and 1.7% between February and March.
“Saskatchewan is breaking away [from trends in other provinces] as its natural resource sector grows substantially larger and the province increases its efforts to attract migrants to the region to help alleviate the labour shortages,” economists at Bank of Nova Scotia explain.
Builders in Saskatoon, Regina and Winnipeg – where prices rose 15.0% from a year ago – said they raised their prices because of higher material and labour costs, and also because of a strong market and high demand for new homes.
Nova Scotia also saw large price increases in March, with Halifax registering a 12.8% increase from a year ago, because of a strengthening economy, rising costs and healthy demand.
Not so in other markets. Edmonton and Calgary are experiencing slower market conditions, and builders in those cities said they were lowering their prices to stimulate sales. Edmonton new housing prices fell for the third consecutive month, declining 1.1% between February and March.
In Vancouver, prices rose 6.1% from a year ago, while Victoria saw a 1.2% rise year over year.
In Windsor, Ont., where the deterioration of manufacturing has hit hard, home prices dropped 0.6% from a year ago. Generally, prices in Ontario and Quebec were not rising as fast as the national average.
New housing prices are an important contributor to Canada’s consumer price index, and a deceleration of the new housing price index will help keep inflation low in Canada, economists say.
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