The price of new homes in Canada jumped by the biggest amount in more than three years last month, because of sky high costs for building materials during the pandemic.
Statistics Canada reported Monday that its New Housing Price Index, which tracks the price of newly-built homes, rose by 0.5 per cent in August.
It’s the fourth straight monthly increase and the biggest monthly jump since May 2017.
The COVID-19 pandemic that sstarted in March and continues to impact all parts of Canadian life has had a big impact on the housing market, first bringing the reselling of homes to a grinding halt as lockdowns and social distancing requirement kept everyone at home. But demand bounced back in a big way, as the normally slower summer months saw record sales. That demand is spilling into the market for new homes, too.
All that time at home has caused homeowners to want to spruce up their homes and renovate, and that’s driving up demand and prices for things like wood, drywall, wiring and tubing.
“With physical distancing measures still in place, some homeowners chose to divert their summer vacation funds towards renovations and home improvements,” Statistics Canada said.
New home construction is also feeling the pinch, caused by higher demand for those same building materials. Suburban areas just outside big cities are seeing tremendous demand, most notably Oshawa, Ont., where prices for new homes rose by 1.8 per cent in a single month.
For the year as a whole, the index is up 2.1 per cent. That’s it’s highest level in more than two years, dating back to March 2018.
The data agency says homebuilders expect the record high lumber prices this year will most likely add an extra $5,000 to $10,000 to the cost of a single family house.
“In the short term, it is expected that the shortage of lumber and building supplies will persist due to the uptick in homebuyer demand, the increased renovation activities in North America, as well as the lingering effects of the reduced operations at sawmills earlier this year,” the data agency said.