04:41 PM EDT, 06/20/2024 (MT Newswires) -- Shelly Kaushik over at BMO Economics has noted on this Thursday that a release earlier today showed Canadian new home prices ticked up again in May, with the three leading cities reflecting the shift towards affordability: Trois-Rivieres (+2.0%), Calgary (+1.3%), and Halifax (+1.1%). Meantime, Kaushik also noted, Southern Ontario continues to correct, with London (-0.8%) and the Kitchener-Waterloo-Cambridge region (-0.4%) posting the largest declines.

On a yearly basis, Kaushik noted, the index is flat following more than a year of deflation. Stripping out changes in land prices, the house only portion -- which feeds into the homeowners' replacement cost component of the CPI -- was down just 0.2% y/y, its smallest yearly decline since entering deflationary territory.

Kaushik the coming months will start to show the impact of falling mortgage rates on the new home market. She added: "While

some bounce back is expected, additional supply could put a damper on a price rally as new home completions are expected to trend higher over the medium term. While any upside pressure from home prices wouldn't immediately change the the Bank of Canada's path, it will be watching them closely."