The benchmark Canadian home resale price has fallen more than 21% in nominal terms (25-30% in real terms) from the 2022 cycle peak (shown below since 2020).

But new home prices have fallen just 8% from the peak nationwide because builders have used incentives, including mortgage rate buydowns, to avoid top-line price cuts.

More price cuts are needed, as so far, home ownership costs as a percentage of household income remain far above historical affordability norms (shown below since 1985).

According to the latest CMHC report, new home construction in Canada is set to decline through 2028 as developers face high costs, weaker demand and more unsold homes. Condominium starts will be especially weak. Rental projects will continue to drive new supply but will moderate over the forecast period.

Rental markets are moving toward balance on a national level as new supply eases pressure and rent growth slows, giving renters more flexibility before buying a home.
Regional housing markets vary significantly.

A negative for economic growth and jobs, new construction and home sales in Ontario and British Columbia are projected to be weaker than their 10-year averages.

Economist Eric Basmajin explains leading indicators and the importance of real estate construction and home renovation to overall economic growth in this segment below.

EPB Research provides economic and business cycle education, analysis, and consulting to asset managers and business owners. Here is a direct video link.