New housing prices inch up, starts decline

Contractors' selling prices for new homes increased 0.1 per cent in September over the previous month, Statistics Canada reported Monday.

In year-over-year comparisons, prices increased 2.1 per cent in September down from the 2.3 per cent increase recorded in August, according to Statistics Canada

Separately, the Canada Mortgage and Housing Corporation reported the number of housing starts in October fell from 218,600 units in September to 211,800 in October.

BMO Nesbitt Burns economist Robert Kavcic said construction in Western Canada appears set to slow in the coming months.

"Both single- and multi-unit starts fell in the month, with the former slipping below the 70,000 level for the first time since 2000," Kavcic said in a release, noting single-family starts have been gradually slipping over the past five years.

"Canadian residential construction activity has held steady since 2003 thanks to strong multiple-unit starts and strength in Western Canada, two sources of support that are likely to wane in the coming quarters."

New housing prices in St. John's and Regina rose 22.7 per cent in year-over-year comparisons, according to Statistics Canada. But the federal agency noted monthly prices remained static in the two cities.

Real estate in Regina has climbed significantly in part owing to Saskatachewan'srich uranium, oil and gas and potash resources. Similarly, in St. John'sthe value of real estate in Newfoundland surged following the signing of the Hebron offshore oil project.

Saskatoon housing prices increased 5.5 per cent in yearly comparisons, though they dropped 2.1 per cent between August and September. Meanwhile, Edmonton prices dipped 5.8 per cent, marking their largest year-over-year decline since July 1985. Prices in Calgary fell 1.2 per cent.

Vancouver and Victoria observed yearly increases of 1.4 per cent and 0.2 per cent respectively, Statistics Canada said. Contractors' prices climbedthree per cent in Toronto and Oshawa and 4.8 per cent in Montreal.

Resale projections recast

Also on Monday, the Canadian Real Estate Association adjusted its forecast and projected national home sales would drop by 12 per cent in 2008 to 461,200 units. In May, CREA had projected sales would ease 11.5 per cent to 460,900 units.

In 2009, sales are expected to fall another three per cent.

"Homebuyer sentiment has become very cautious, by contrast to the urgency to purchase in 2007," association chief economist Gregory Klump said in a release.

"There are fewer buyers and they are taking longer to shop, so the pricing environment is very competitive. Unrealistically priced homes will sit on the market. Sellers are by and large under no distress to sell."

The associationsaid there will be fewer new home listings in 2009. Klump alsonotedthat while the price of average homes will continue to increase in 2008, activity will declinein pricier markets.