New-House Prices Slightly Decline in Weak Market Conditions

In September, new-house prices in Canada experienced a slight decrease due to ongoing weak market conditions and elevated interest rates, according to Statistics Canada. The new-house price index fell by 0.2% compared to the previous month, following a modest increase of 0.1% in August. Year-on-year, prices for the month were 1.0% lower.

Builders surveyed by Statistics Canada cited weak market conditions and reduced construction costs as factors contributing to the declines. Out of the 27 metropolitan areas surveyed, prices were down in nine, unchanged in 15, and up in three.

Bank of Canada policymakers are scheduled to meet on Wednesday to decide on interest rates. In the previous month, the policy rate remained at a 22-year high of 5% after consecutive one-quarter increases in June and July.

It's worth noting that the new-house price data from Statistics Canada focuses on single-dwelling, semi-detached, and row houses. Prices for newly built condominium units are not included.

Meanwhile, existing home prices have been stabilizing in recent months, with a slight national dip recorded in September. According to the Canadian Real Estate Association, benchmark prices, which are calculated similarly to the S&P CoreLogic Case-Shiller National Home Price Index, slipped by 0.3% compared to the previous month. This decline is the first since March.

Overall, the housing market in Canada continues to face challenges, and the impact of interest rates on prices remains a key factor to monitor moving forward.