National Home Sales Hold Steady for First Time Since 2022 Peak: CREA
Patti Cosgarea
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National home sales were down only 1% month-over-month in August, marking the smallest dip we’ve seen this year since the February peak. Annually, sales are down 24.7%, less than the 30% drop we saw in July. The Canadian Real Estate Association (CREA) suggests that these may be signs that the market is settling as rising interest rates are beginning to moderate.
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For Buyers: Inventory is Improving Following 2022 Record Low
At the beginning of the year, we saw record low inventory at 1.7 months. In August, inventory was up to 3.5 months; although this is still below the long-term average of five months, this is an improvement and another sign that supply is slowly catching up to the demand. “August saw national sales hold steady month-to-month for the first time since February which, along with a stabilization of demand/supply conditions in many markets, could be an early sign that this year’s sharp adjustment in housing markets across Canada may have mostly run its course,” said Jill Oudil, Chair of CREA.
For Sellers: Canadian Cities Experiencing a Split in Price Gains and Declines
The actual (not seasonally adjusted) national average home price in August was $637,673, down 3.9% year-over-year. Canadian markets were at an even split between markets where prices were up or down, but as we’ve seen in previous months, many Ontario markets including the Greater Toronto Area (GTA) are driving the gains. On the other hand, Greater Vancouver, Calgary, Edmonton, Winnipeg, and Halifax-Dartmouth were some of the major markets that experienced declines.
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Many Still Waiting on the Sidelines as Fluctuations Continue
The number of new listings dropped by 5.4% from July to 67,775 properties. Some sellers are choosing to wait out the market until more buyers are active. The increase of 300 basis points in the Bank of Canada interest rate this year has some buyers anxious about mortgage qualifications. The sales-to-new-listing ratio is currently signaling a balanced market at 54.5%, which CREA states is close to the long-term average of 55.1%.
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Shaun Cathcart, CREA’s Senior Economist, explains that the Bank of Canada’s interest rate hikes have put downward pressure on the housing market and Canadians are struggling to catch up. “The stress test was unpopular with some when it was introduced. But as we have all now watched the Bank of Canada raise its key interest rate by 300 basis points in the space of five months, it’s clear many Canadians were protected by it,” says Cathcart.
“But should there not be a flipside to the coin? The overnight rate is now officially above the Bank of Canada’s “neutral” range and not expected to go too much higher. This is not about “looser” or “tighter”, it is about what is appropriate given where rates are and where they are likely to go moving forward. OSFI is likely thinking hard about what makes sense given the new realities, and how to balance the community of interests they are tasked with securing.”
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