Home Builders' Confidence On The Rise, But Market Slowdown Persists

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For the first time in a year, home builder confidence has risen in Canada, but high interest rates and the rising cost of construction are keeping prospective buyers on the sidelines. CHBANational | realestate realestatenews housingmarket

4:50 PM May 30, 2023

The single-family and multi-family HMIs both rose, albeit slightly, in Q1 2023 from their previous record-lows, the first time that builder sentiment has increased since Q1 2022. On a quarterly basis, the single-family HMI rose from 26.2 to 34.3 in Q1 2023, while the multi-family HMI increased from 26.0 to 33.5.

Buyers are expectantly waiting for prices to drop, especially in the entry-level market, but input costs continue to rise. Nationally, the average construction costs for a 2,400-sq.-ft. home are nearly $68K higher than before the pandemic. Labour costs have also increased, up 26% from pre-pandemic levels, while supply chain issues continue to cause an eight-week delay, on average, in home completions.

Fifty-nine percent of respondents said the market slowdown is leading them to build fewer units, and 23% said it’s causing them to cancel projects altogether.

 

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