When it comes to July 2022 new-home sales, it was a record month, but not in a good way. In fact, it was a record month in more ways than one.
According to the latest monthly report prepared by PMA Brethour Realty Group on behalf of the Greater Ottawa Home Builders’ Association, there were a paltry 82 new-home sales in July, down a whopping 63 per cent over July 2021, when there were 225 sales. The poor result was the lowest July for new-home sales that PMA has recorded, says Ottawa president Cheryl Rice. The previous low was back in July 1995, when there were 146 sales.
The poor showing echoed a similar 64-per-cent drop in sales in June 2022 versus June 2021.
While it wasn’t quite as bad on the resale front, the Ottawa Real Estate Board reported sales were down 35 per cent in July, continuing a months-long slide.
At the opposite extreme, July was also a record for new-home starts — this time a record high. According to the Canada Mortgage and Housing Corp., housing starts in Ottawa-Gatineau ballooned almost 170 per cent over July 2021, topping the 2,000 mark for the first time. Construction began on 2,130 units, versus the 795 that were started last year.
Back to the new-home sales, the low showing represents “our current market reality of high interest rates and inflation levels not seen in decades,” says Rice. “It’s a period of uncertainty for many consumers, so they’ve pushed the pause button on major purchase decisions, like buying a new home.
“Unfortunately, the high cost of borrowing, combined with now out-of-reach ‘affordable’ product like townhomes, has forced many first-time home buyers out of the market,” she adds. “Even second- and third-time homebuyers have decided to stay put.”
She says that buyers who are sitting on the sidelines waiting for prices to go down are more likely to see builders offer bigger and better incentives to help sell off existing inventory and generate sales.
And while there are numerous new project openings in the pipeline, we’re not seeing many firm launch dates being promoted just yet.
“Builders are sure to be closely monitoring the impact of the Bank of Canada’s next move to bring inflation under control and the subsequent impact of more rate hikes on housing demand,” Rice says. “The good news is that even with new-home sales plummeting in recent months, Ottawa is on a path to a balanced market.”
