New home prices have moderated in recent months

Canadians have seen new home prices increase over the past several years, with the New Housing Price Index up 22.1% since November 2019. In recent months, however, the price increases have moderated, edging down 0.1% in September 2022 nationally, with most census metropolitan areas reporting no price changes for the month.  

New home prices edge down on higher interest rates, lower demand and construction costs

Higher interest rates helped curb the demand on new home sales and were a consequence of the Bank of Canada trying to moderate the inflation rate.

Lower demand for housing, lower construction costs and uncertainty regarding future interest rates also contributed to the small month-over-month decline in new home prices at the national level. 

New home prices fall at the fastest pace in Hamilton, Kitchener–Cambridge–Waterloo and Windsor

New home prices decreased the most in Hamilton, Kitchener–Cambridge–Waterloo and Windsor (each down 0.6%) in September.

In Hamilton, realtors reported that increased supply and lower demand in the resale housing market led to a correction in prices due to buyer hesitation amid rising interest rates and a belief in the potential for further price corrections. This same uncertainty may have contributed to the decline in prices for new homes in the area as well.

Builders in Kitchener–Cambridge–Waterloo cited bad market conditions as the reason for falling prices. Realtors in the tri-city area reported that sales of townhouses and condos fell at a fast pace in September, which may suggest that higher borrowing costs are reducing the number of entry-level buyers in the housing market.

In Windsor, the number of active resale listings (1,408 units) hit their highest level in five years in September, but remained below the 10-year average, according to the Canadian Real Estate Association.

New home prices for October will be announced on November 22.