Drop In New Houses

So the numbers for new housing development decreased in May.  What forecasters say about this decrease has to do with the recent increase in interest rate from 0.25% to 0.50%.  Only a 0.25% increase affected the market this much?  In real terms if you were to get a 5 year mortgage rate at the 0.25% rate you would've gotten it for 5.25% a year but now since the Bank of Canada prime interest is at 0.50% that mortgage increased to 6.25%  THAT'S A WHOLE 1%.  On a $400,000 mortgage 1% means $4,000 and that's a fair chunk of change. 

Here's some reasoning behind it.  The current market prices for houses did drop slightly, new or old.They are unable to sustain those prices because of increase in interest rates and competition between new and old houses.  Recently new houses have been priced nearly the same as an old house and they are the same thing, what would you have picked?  NEW or OLD?  What I see happening is old house pricing dropping at a faster pace depending on how much new houses get sold for. Generally new houses will get sold for a higher than market price due to the buyer having many options in selecting what kind of flooring, siding, kitchen...etc they want.  So investors watch OUT!

G.