Canadian new home prices recorded their sharpest one-month gain in three years with higher demand and rising costs for building materials.

Prices rose 0.5% in August, Statistics Canada said Monday in Ottawa. That’s the biggest increase since May 2017. Gains were recorded in most of the country’s big metropolitan centres.

The data are consistent with other indicators showing Canada’s housing market hitting new all-time highs in recent months as pent-up demand for homes combines with tight inventory levels and historically low interest rates.

The statistics agency said shortages for lumber and other building materials are driving up construction costs this year, a situation it expects will persist. It cited homebuilders as saying record high lumber prices this year will probably add $5,000 (US$3,770) to $10,000 to the cost of a single family home.

Vancouver recorded a 1% gain in August, while Toronto was up 0.3%. From a year earlier, new house prices have increased 2.1%, the largest year-over-year gain since March 2018.

The new housing price index measures the change in the sale price of new single, semi-detached and row houses, but excludes condos.

Prices of New Homes in Canada Jump The Most in Three Years as Lumber Costs Rise by Erik Hertzberg & Theophilos Argitis | Bloomberg News | Financial Post