New home prices continued to edge lower in January, according to the latest reading from Statistics Canada.
With prices flat or down in 25 out of 27 markets, StatsCan’s new housing price index declined by 0.2% last month.
The national statistical agency said that higher mortgage rates “continued to put downward pressure on new house prices” in January, as the Bank of Canada raised its policy interest rate by another 25 basis points to 4.5%, boosting borrowing costs.
Higher rates have, in turn, reduced demand for new construction.
And, at the same time, the price of softwood lumber is now down 61.2% from its high in March 2022, StatsCan noted.
Lower construction costs, along with weaker demand, are driving the decline in housing prices, it said.