Residential Building Construction Prices Gain Largest On Record

Prices for residential building construction increased at a faster pace in the fourth quarter (2.9 per cent) than in the third quarter (2.5 per cent), says Statistics Canada. The gain in the fourth quarter was the largest on record. Conversely, the growth in prices for non-residential building construction slowed in the fourth quarter (0.4 per cent) compared with the third quarter (0.5 per cent). Construction prices for residential buildings were up in the fourth quarter in all of the census metropolitan areas (CMAs). Non-residential construction prices increased at a slower pace in every CMA except Moncton, NB, where they were flat. Year-over-year, residential building construction costs (6.6 per cent) rose at four times the pace of non-residential construction (1.5 per cent) in the fourth quarter, mainly because of the high demand for housing and a shortage of lumber across the country. A combination of tight supply and high demand for lumber continued from the third quarter into the fourth quarter, driving up the cost of residential building construction. Typically, the seasonal nature of the construction sector results in less activity in the winter months and provides sawmills with the opportunity to restock their log yards in preparation for the coming year. However, shutdowns of sawmills last spring because of COVID-19 as well as unseasonably mild weather in British Columbia made it more difficult to harvest logs. The resulting tight supply drove up prices for lumber and other wood (44 per cent) and softwood lumber (78.8 per cent) in December 2020 compared with December 2019.