Photo: The Canadian PressA new home goes up for sale in a new subdivision in Ottawa on Tuesday, July 14, 2020. According to Statistics Canada, the price of new homes jumped 0.5% in August, the largest increase in a month since May 2017. LE CANADIAN PRESS / Sean Kilpatrick
New home prices jumped half a percent in August, the biggest increase in a month since May 2017, Statistics Canada said Monday.
The rise in prices is driven by both increased demand from home buyers and higher construction costs, according to the index, which scores 27 cities based on their price comparison to December 2016.
Record lumber prices mean home builders could add $ 5,000 to $ 10,000 to the cost of building a single-family home.
Canada is facing a wood shortage as more people look to renovate, and sawmills are producing less thanks to staffing measures to stop the spread of COVID-19. Earlier this summer, automakers reported increased costs due to delays related to the pandemic.
Meanwhile, Statistics Canada says homebuyers are raising prices for new homes, competing with a relatively low inventory of new homes on the market, especially in Ottawa and Montreal. Data from the start of the summer suggested that more homebuyers were competing for homes with expanded living space, moving to single-family homes or townhouses.
Oshawa, Ontario, and Quebec saw the largest increase, with price increases of almost 2% between July and August. Halifax was also on a tear, up 1.6% in August – the eighth consecutive monthly increase.
A separate Statistics Canada report on Monday also said 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% rise in investment in residential construction in July, led by $ 5.1 billion in investment in single-family homes and boosted by $ 4 billion in construction spending in Ontario.