New house prices in Canada increased by 0.7% month on month in May, led by markets in Toronto and Vancouver, the latest official figures show.

Toronto was the largest contributor to the national gain, with new home prices rising 1.1% from April to May, according to the data from Statistics Canada.

The report points out that builders have linked higher prices to market conditions, a shortage of developed land and higher construction costs.

Prices for new houses in Vancouver rose for a third consecutive month, up 2.2% in May and the largest increase since May 2007. Builders cited favourable market conditions as the main reason for the gain.

New home prices also increased in other locations, most notably a rise of 1.7% in Guelph, an increase of 1.5% in London and up 0.9% in St. Catharines–Niagara prices were down in five metropolitan areas and unchanged in nine.

Year on year new house prices in Canada have increased by 3.8% in the 12 months to the end of May 2017, led by a 9% increase in Toronto.

Other notable year on year gains were recorded in the Southern Ontario communities of St. Catharines–Niagara, up 7.2%, Kitchener–Cambridge–Waterloo up 6.5% and London also up 6.5%.

Prices were down in six metropolitan areas, with Calgary posting the largest decrease of 0.9%.

New Home Prices in Canada Crept Up Month on Month in May 2017 by Property Wire