Canadian Home Sales Show Signs of Stabilization in June: CREA

The Canadian Real Estate Association (CREA) recently released statistics indicating that national home sales have once again shown an increase on a month-over-month basis in May 2023.

Some highlights from the month of June include the following.

National home sales experienced a modest upward movement of 1.5 per cent on a month-over-month basis. The actual, unadjusted monthly activity demonstrated a 4.7 per cent rise compared to June 2022. There was a notable 5.9 per cent increase in the number of newly listed properties from the previous month. The MLS Home Price Index (HPI) exhibited a 2 per cent climb on a month-over-month basis; however, it still registered a 4.5 per cent decline when measured year-over-year. The actual, unadjusted national average sale price saw a significant 6.7 per cent year-over-year growth in June.

Within the context of the monthly housing market report, the following observations can be made.

The data from Canadian MLS Systems revealed a 1.5 per cent increase in home sales between May and June 2023. This increase was comparatively smaller than the growth observed in April and May. Notably, sales experienced an uptick in June in slightly more than half of all local markets. In this scenario, the gains in British Columbia and Alberta helped to offset the reduced sales in the Greater Toronto Area (GTA).

Photo source: CREA

In June 2023, the unadjusted actual number of transactions exceeded June 2022 by 4.7 per cent, marking the most substantial year-over-year growth in national sales witnessed over the past two years.

“Housing markets appear to be stabilizing heading into the summer following some big ups and downs over the last year,” said Larry Cerqua, chair of CREA. “Most importantly, the recovery in new listings over the last few months will give buyers more choice and should help to slow price growth over the second half of the year.”

“With sales levelling off near historically average levels and new listings finally starting to play catch up, housing markets appear to be settling down,” said Shaun Cathcart, CREA’s senior economist. “History suggests the price side of things will respond to this with only a slight lag. Add to that the recent Bank of Canada rate hikes, and we can probably expect price growth to moderate in the months ahead, likely still with some degree of upward pressure, but less than in the last three months.”

In June, there was a 5.9 per cent month-over-month increase in the number of newly listed homes, according to the statistics. This upward trajectory builds on the previous gains of 3.1 per cent in April and 7.6 per cent in May. The shift has been significant, transitioning from a 20-year low in March to approaching, yet still falling short of, the average as we head into the summer season.

“June was another month of rebounding sales and prices for Canadian real estate. Home sales increased 1.5 per cent compared to May 2023, and were up 4.7 per cent year-over-year. The national average sale price, $709,218, was 6.7 per cent higher than a year ago,” commented Clay Jarvis, mortgage and real estate expert, NerdWallet Canada.

The dynamic between new listings and sales altered in June, causing the sales-to-new listings ratio to ease to 63.6 per cent, in contrast to the 66.4 per cent seen in May and the recent peak of 68.3 per cent noted in April. Despite this adjustment, the measure remains notably higher than the long-term average of 55.2 per cent.

At the conclusion of June 2023, the national inventory stood at 3.1 months, the same as May’s figure. This represents a decrease of more than an entire month from the most recent peak at the end of January. For context, the long-term average for this metric was approximately five months.

In June 2023, the Aggregate Composite MLS Home Price Index (HPI) displayed a substantial 2 per cent climb on a month-over-month basis. This notable increase for a single month follows similar growth patterns in both April and May. Furthermore, the rise was widely spread across various local markets, with most regions observing a monthly price increase between May and June.

Photo source: CREA

“The lack of properties on the market in several major cities means one thing — competition — which is one of the most dependable means of pushing prices higher,” commented Jarvis. “Fixed mortgage rates, which softened in the spring, are hitting levels that are bound to be problematic for many borrowers. Posted one- and three- year fixed rates are around 7 per cent at many major banks. Interest costs are just one side of the coin, though. Being offered a rate of 7 per cent would require passing a mortgage stress test at an eye-watering 9 per cent.”

In June 2023, the unadjusted actual national average home price stood at $709,218, indicating a notable 6.7 per cent increase from June 2022. The report also noted that the national average price was significantly influenced by the Greater Toronto Area (GTA) and British Columbia’s Lower Mainland.

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