Canadian Home Prices See Sudden End to Declines Ahead of Spring Market: CREA

In February 2024, Canadian home prices were "flat" on a month-over-month basis according to the Canadian Real Estate Association (CREA).

As measured by the seasonally adjusted Aggregate Composite MLS Home Price Index (HPI), Canadian home prices were flat on a month-over-month basis in February 2024, which ended a streak of five declines that began last fall, according to the latest data from the Canadian Real Estate Association (CREA).

Image credit: CREA

According to CREA, the fact that prices were unchanged from January to February was noteworthy given they had dropped 1.3 per cent from December to January. CREA also noted that considering how stable the seasonally adjusted MLS HPI tends to be, shifts this abrupt are rare.

According to CREA, there have only been three other times in the last 20 years that have shared a sudden improvement or increase in the month-over-month percentage change from one month to the next of this size; all at points in the last four years during a time when demand was coming off the sidelines.

“It’s looking like February may end up being the last relatively uneventful month of the year as far as the 2024 housing story goes,” said Shaun Cathcart, CREA’s senior economist. “With so much demand having piled up on the sidelines, the story will likely be less about the exact timing of interest rate cuts and more about how many homes come up for sale this year.”

According to CREA, home sales activity recorded over Canadian MLS Systems dipped 3.1 per cent between January and February 2024, giving back some of the 12.7 per cent increase in activity recorded in December 2023 and January 2024. CREA noted that the general trend has been somewhat higher levels of activity over the last three months in comparison to a quiet fall market in 2023.

The actual number of transactions came in 19.7 per cent above February 2023, according to CREA. Part of that gain reflects the fact that February 2023 sales were one of the lowest for that month in the past two decades, noted CREA, while also reflecting that current activity has climbed back to only around 5 per cent below the 10-year average.

The number of newly listed homes edged up 1.6 per cent on a month-over-month basis in February, according to CREA.

CREA also noted that gains may rise in the coming months depending on how many owners are preparing to list their properties for sale this spring.

“After two years of mostly quiet resale housing activity there’s a feeling that things are about to pick up,” said Larry Cerqua, chair of CREA. “At this point, it’s hard to know whether buyers are going to wait for a signal from the Bank of Canada or whether they’re just waiting for the spring listings to hit the market.”

CREA noted that with sales edging down and new listings inching up in February, the national sales-to-new listings ratio eased to 55.6 per cent. The long-term average for the national sales-to-new listings ratio is 55 per cent.

There were 3.8 months of inventory on a national basis at the end of February 2024, according to CREA, up slightly from 3.7 months at the end of January. The long-term average is about five months of inventory.

The actual national average home price was $685,809 in February 2024, up 3.5 per cent from February 2023, according to CREA.

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