New home prices keep heading down

Financial Post Published: Tuesday, May 12, 2009

Prices for new homes fell for the sixth straight month in March, led by declines in Western Canada, as the country's real estate market continued to weaken amid the economic downturn. Statistics Canada said yesterday that prices were down 0.5% during the month, compared to a 0.7% drop in February. The March decline was in line with analysts' forecasts. For the year, new home prices were down 2.4% in March, compared to 1.8% year-on-year decline in February. The biggest price declines in March were in Calgary and Edmonton, with prices falling 1.2% in both cities. Vancouver saw a 1.1% decline and Victoria was down 0.9%, the federal agency said. "In Calgary and Edmonton, declines were attributed to lower material and labour costs and lower lot prices from developers," it said. "In Vancouver and Victoria, builders reported lower prices due to competition and slow market conditions." Millan Mulraine, economics strategist at TD Securities, said "the continued drop in new home prices is a reflection of the overall weakness in the Canadian housing market, and the weak domestic economic conditions and soft labour-market conditions continue to sap housing demand."