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Nationally, new housing prices in Canada remained unchanged in May for the third straight month, according to new data from Statistics Canada. Prices were flat or declined in 15 of 27 census metropolitan areas (CMAs) surveyed during the month.
Recent mortgage rate hikes, along with tighter mortgage regulations, may have slowed the demand for new homes, the researcher said in its monthly New Housing Prices Index report. The Bank of Canada reported that the rate for a conventional mortgage on a five-year term increased from 5.14 percent to 5.34 percent in May.
Toronto new home prices were unchanged in May, following four consecutive months of declines. The Canada Mortgage and Housing Corporation reported that, year to date, housing starts in Toronto were down 36 percent in May compared with the same period in 2017, reflecting a slower pace of construction for row, single and semi-detached new houses.
Among the 12 CMAs reporting gains in May, the largest increases were in Guelph, London and Windsor (+0.3 percent in each). Builders in Guelph attributed the rise to higher construction costs, while builders in London and Windsor cited market conditions as the primary reason for higher prices.
Despite the higher new home construction costs reported in several CMAs, increases were partly offset by builders offering incentives, such as promotional packages, rebates, and design credits, to promote sales in slowing housing markets.