New home sales jump

Sales of new low-rise homes rose by 67% in October from October 2012, and high-rise sales were up 17% in the same period. Combined, new-home sales rose 32% from October 2012, according to RealNet Canada Inc., the Building Industry and Land Development Association’s (BILD) source for new-home market intelligence.

Read: Canadian home sales fall back in October

The pricing index — or the average asking price of available inventory excluding the extremes — for low-rise was among the factors for the jump as it dropped 0.6% from September to October.

While October was a strong sales month, the year-to-date figures are still the lowest total in 10 years. The January-to-October sales were down 19% from the 10-month period in 2012, and 26% lower than the 10-year average.

The decline is attributed to a significant reduction in land supply for low-rise housing, resulting in near-record low inventories and near-record high pricing.

“Constrained land supply has caused land prices to increase dramatically over the past decade,” said BILD president and CEO Bryan Tuckey.

Supply of new homes for the January-to-October period (25,491 units) is down 27% from 2012 (35,006).

Read: Canada’s homes too expensive

“Builders are being much more careful about how much and when they’re launching high-rise projects,” Tuckey added. “Restrictive land policies are keeping low-rise supply low. That’s what we’re seeing in these new numbers.”

As for the remaining inventory, there were 31,425 units on the market by the end of October, up 2.1% from September.

Meanwhile, the RealNet new home price index showed the average cost of a low-rise home in the GTA was $655,237for October, up 6.3% from October 2012. The cost of a high-rise unit stands at $432,825, a 1.5-per-cent drop from 2012. The current price gap between low- and high-rise is $222,412, the second-highest on record (the highest came last month: $226,016).

“Near record high pricing has pushed the costs of ground-related housing beyond what people can afford to buy in the GTA,” Tuckey said.

Read: U.S. home prices stable

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.