Canadian real estate has been experiencing a bit of a lull, and the new home market is no exception. Statistics Canada (Stat Can) data shows new home prices saw annual growth hit a multi-year high in June. The high was due to momentum though, as price growth had been decelerating more recently. Growth appears to be soaring still, but it’s actually losing steam very quickly. The longer-term trend just hasn’t caught up to more recent activity yet.
Canadian New Home Prices Hit A New Record High
Canadian new home prices slowed in growth, but still printed enormous annual gains. The index showed prices climbed 0.6% in June, and are now up 11.9% compared to a year before. Prices in the index reflect a new all-time high right across the country.
Monthly Growth Is Slowing Down Very Fast
The agency did mention a slowdown multiple times though. Stat Can notes this is the second month of declining growth. They additionally mention the monthly climb is the smallest seen in the past six months. A slowdown is definitely happening.
Canadian New Home Price Growth
The index price of a new home across Canada.
Source: Stat Can; Better Dwelling.
Canadian New Home Prices See Largest Annual Growth Since 2006
What they didn’t mention is how large the rate of annual growth is currently. At 11.9% in July, new home prices made the largest annual climb since 2006. If it rises above 12%, it’ll be the highest rate since the late 1980s. Despite smaller monthly gains, the market may have enough steam to print that record.
Canadian Annual Growth May Rise Next Month, But It Wouldn’t Be What Is Seems
The 0.6% growth seen for the month of June might be the smallest gain in six months, but it’s still a big one. It helped to push the 3-month annualized rate of growth to 15.7% in June. Lower than the past few months, but much higher than the 12-month rate.
What does this mean? Annual growth may push to a new high in July, even if more recent numbers are slowing. That might give the impression of an accelerating market. However, the reality is it’s already begun to slow down, the data just hasn’t caught up with it yet.
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