OTTAWA — Prices of new homes jumped half a per cent in August, the biggest one-month increase since May 2017, Statistics Canada said on Monday.
The rising prices stem both from increased demand from homebuyers and higher building costs, according to the index, which scores 27 cities based on how their prices compare to December 2016.
Record high lumber prices mean homebuilders could add $5,000 to $10,000 to the cost of building a single-family home.
Canada is seeing a lumber shortage as more people look to renovate, and sawmills are producing less amid staffing measures to stop the spread of COVID-19. Earlier this summer, builders reported increased costs from pandemic-related delays.
Meanwhile, Statistics Canada says homebuyers are bidding up the prices of new homes, competing over a relatively low inventory of new houses on the market, particularly in Ottawa and Montreal. Data from earlier this summer suggested that more homebuyers were vying for homes with expanded living space, upgrading to detached homes or townhouses.
Oshawa, Ont., and Quebec City saw the biggest jump, with price increases of nearly two per cent between July and August. Halifax has also been on a tear, up 1.6 per cent in August — the eighth consecutive monthly increase.
A separate report from Statistics Canada on Monday also said that more new homes are under construction, but builders are still below February 2020 levels as they recover from the COVID-19 pandemic.
There was a 4.9 per cent uptick in residential construction investments in July, led by $5.1 billion in investments in single-family homes, and spurred on by $4-billion worth of construction spending in Ontario.
This report by The Canadian Press was first published Sept. 21, 2020.