New home price hikes not builders’ fault
September 17, 2021
New home prices in Canada posted the highest one-month gain in August 2021 in three years—not due to the fault of home builders. Instead, the price hike was traced to rising, and even record-high, costs for building materials.
Prices for new housing rose 0.5 per cent in August, according to Statistics Canada reports—the biggest increase since May 2017. Gains were recorded in most of Canada’s large metropolitan centers.
Statistics Canada said shortages for lumber and other building materials drove construction costs up this year—a situation that is expected to continue. Based on builder surveys, Statistics Canada estimates record high lumber prices alone in 2021 will probably add $5,000 to $10,000 to the cost of a new single-family house. While lumber prices have dropped recently, many new houses being completed now are built with lumber purchased during peak pricing periods earlier in 2021.
Greater Toronto recorded a 0.3 per cent increase in August from a month earlier, while Vancouver new home prices were up 1 per cent in the same period. From a year earlier, new house prices have increased 2.1 per cent nationally—the largest year-over-year gain since March 2018.
The new housing price index from Statistics Canada measures the change in the sale price of new single, semi-detached and row houses, but excludes condominium apartments.