New Housing Price Index, February 2023

Released: 2023-03-22

New home prices in Canada continue declining in February

The national index declined 0.2% month over month in February, following a similar decrease in January. The index has been down in five of the last six months. In February, prices were down or unchanged in 25 of the 27 census metropolitan areas surveyed and up in 2.

Chart 1 
New Housing Price Index

Elevated borrowing costs continue contributing to the decline in new house prices

In February, new home prices fell the most in St. Catharines–Niagara (-1.3%), Victoria (-0.9%) and Gatineau (-0.9%), with builders noting deteriorating market conditions as the reasons for the declines.

High mortgage rates continued slowing housing demand, with the Canada Mortgage and Housing Corporation reporting 44.1% more unsold, newly constructed single-family homes in Canada in February 2023 compared with February 2022. Similar conditions were seen in the resale housing market, with the number of national sales decreasing 40.0% year over year in February 2023, as reported by the Canadian Real Estate Association.

In February, prices were also down in Toronto (-0.3%) and Vancouver (-0.1%), the two largest housing markets in Canada, and thus largely contributing to the decline of the national index.

Prices for new homes increased in Trois-Rivières (+0.2%) and Winnipeg (+0.1%) in February.

Chart 2 
New house prices decline at the national level

Canada's most expensive housing markets see muted annual price changes

Nationally, new house prices increased 1.4% on a year-over-year basis, which is significantly lower than the annual change of 10.9% recorded in February 2022, when the Bank of Canada policy interest rate was still at its all-time low of 0.25%, compared with the current rate of 4.5%. As well, lumber prices, which put upward pressure on construction costs one year ago, fell 52.5% year-over-year in February 2023.

According to the Canadian Home Builders' Association, builder confidence declined over the previous year, with its single-family Housing Market Index declining 58.7 points in the fourth quarter of 2022 (26.2) compared with the fourth quarter of 2021 (84.9). The report links the decline to the uncertainty in the housing market, amid high interest rates.

In Canada's most expensive markets, which include the Greater Golden Horseshoe (Oshawa, Toronto, Hamilton, St. Catharines–Niagara, Kitchener–Cambridge–Waterloo and Guelph), Vancouver and Victoria, new home price changes were muted year over year, ranging from -1.1% to +0.3%.

In contrast, comparatively less expensive housing markets in Canada, particularly Calgary (+6.8%), Windsor (+4.9%) and Ottawa (+4.5%), posted the largest annual price increases among the cities surveyed. These increases have also moderated compared with February 2022, when annual growth stood at 18.7% in Calgary, 20.7% in Windsor and 20.2% in Ottawa.

Contact information

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