Home builders

Canadian Homebuilders Regain Market Confidence

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Homebuilders in Canada are bullish on demand for new homes, with an index measuring their sentiment hitting a record high at the end of 2021.

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The Canadian Home Builders’ Association released year-end data for its housing market index, showing it hit an all-time high in the fourth quarter of last year.

The index polls a panel of builders across Canada on their views on the demand for detached single-family homes and multi-family developments. The association started collecting data based on survey results in January last year, and until the last quarter of 2021 the index had fallen, quarter after quarter, reflecting the perception of homebuilders that market conditions were deteriorating.

A related CHBA report said the drop in confidence was the result of growing concerns about supply chain disruption, rising material costs, successive waves of COVID-19 and housing affordability.

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These concerns eased in the last quarter of 2021, however, as strong demand for new homes picked up.

Concerns remain, the report noted, noting that overall construction costs nationwide rose about 13% in the fourth quarter from the previous quarter.

This translates to an increase of $68,000 for a house of approximately 2,500 square feet. Lumber costs are again a major factor, accounting for about half of the price increase. Still, about 70% of panel respondents noted that the costs of other materials are now rising faster, averaging about $20,000 more for a single-family home. Given the current challenges, almost two out of three respondents indicated that they had delayed some pre-sales and some developments.