The number of vacant new homes in Edmonton has reached a record high for the fifth consecutive month.
ATB Financial says the number of completed — but not purchased — homes climbed to 1,941 in January.
That is a 63 per cent increase compared to a year ago and a 7.5 per cent increase from a month earlier, according to ATB.
Calgary is experiencing a similar situation, with the number of vacant new homes reaching 891 in January, which was close to the record reached in 2001, ATB said. The number also marks a growth of 39 per cent from a year earlier.
ATB said several factors have caused the increase, including an uncertain economy, tough labour market conditions, stagnant wages, higher mortgage rates and tougher mortgage financing rules.
The financial institution said while forecasting in the housing sector is “fraught with uncertainty,” the rise in the number of vacant new homes in not totally unexpected given the slower pace of economic growth in Alberta.
“What is surprising is the steepness of the increase and this may be a reflection of the mortgage rules that came into effect just over a year ago either delaying new purchases or leading buyers toward lower-priced options in the resale market,” Rob Roach, director of insight at ATB Financial, said.
It is good news for prospective buyers who are likely to find better deals as the value of homes across Alberta fell by nearly 10 per cent in 2018.
Roach said it will take some time to clear out the backlog of vacant new homes.
“This will depend in part on what home builders decide to do in terms of housing starts and how the economy is doing statistically and in terms of how Albertans are feeling about where things are headed, as both can have a significant impact on the decision to buy a home.”
ATB anticipates home prices could continue to dip this year.