An economist with a builders’ association is warning that new home construction numbers could dip in B.C. this year, as the B.C. Real Estate Association (BCREA) reported sluggish home sales in February.

The BCREA said that just over 4,500 residential units were sold across the province last month, down almost 10 per cent from the same period last year.

The average residential price on the Multiple Listing Service in B.C. also fell 2.9 per cent to about $932,000, while dollar sales volumes were $4.21 billion, a drop of 12.3 per cent.

Those in the real estate industry have warned of a slowdown in the market for months now, as Vancouver-area home sales hit a 25-year low last year.

Jock Finlayson, the chief economist of the Independent Contractors and Businesses Association, said developers were announcing layoffs and projects were being shelved, and predicted that new home starts would dip this year amid the faltering real estate market.

“There’s a very significant slowdown underway in the residential home building and real estate development sector in B.C.,” he told Gloria Macarenko, host of CBC’s On The Coast. “It’s a big part of our economy.”

Finlayson said new home construction numbers would likely fall this year and next year as well.

He said home starts held up in 2024 and part of 2025, but that was because those projects were financed years earlier during the pandemic when housing demand spiked.

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Now, he says, rising permitting and approval costs are adding tens of thousands of dollars to the price of new builds.

“That ends up … flowing through onto the consumer or the buyer,” he said.

“So we have both a sluggish market, but still [a] quite unaffordable product, coming onto the market from the perspective of many households in B.C.”

Finlayson said the condo market in particular was suffering, as the presale model — where 60 or 70 per cent of a building’s units are sold before the project is fully financed — suffers from a lack of demand.

The economist said that lowered federal immigration targets mean that there’s less demand for housing across the board.

The BCREA says the market “continues to struggle” across all regions of the province.

Housing minister defends progress

B.C. Housing Minister Christine Boyle said the government shared the real estate industry’s worries about a dip in new construction, and she was in discussions with the federal government on how to further reduce homebuilding costs.

She said the government had already taken “significant action” to streamline permitting, rein in short-term rentals and offer homebuilders more financial flexibility in a bid to make housing more affordable.

“I absolutely think that we can’t go back to the way things were a decade ago … housing prices were skyrocketing, speculators were driving up housing demand, red tape was blocking and slowing down construction,” she said.

“It turned B.C. into one of the most expensive housing markets in the world.”

The minister said she would work with local governments to provide more infrastructure in their communities to help speed up home construction — even as many mayors rankle against provincially-mandated housing targets.

“About the housing targets, those were based on a measure of need, but the housing targets themselves were just set at 75 per cent of what that calculated need was,” Boyle said.

“So there’s already some buffer built into that for changes, like these federal immigration changes.”