National home sales rise despite low housing supply: CREA

CREA statistics reveal that national home sales climbed 5.1 per cent on a month-over-month basis in May 2023.

Statistics released by the Canadian Real Estate Association (CREA) revealed national home sales were up again on a month-over-month basis in May 2023.

Monthly home sales (CNW Group/Canadian Real Estate Association)

According to the statistics, national home sales climbed 5.1 per cent month-over-month in May while actual monthly activity came in 1.4 per cent above May 2022.

While still historically low, the total number of newly listed properties rose 6.8 per cent month-over-month.

The MLS Home Price Index (HPI) climbed 2.1 per cent month-over-month but was still down 8.6 per cent year-over-year.

The actual national average sale price posted a 3.2 per cent year-over-year increase in May, according to the statistics.

Home sales recorded over Canadian MLS Systems revealed a 5.1 per cent increase between April and May 2023. Sales were also up in roughly 70 per cent of all local markets, including Canada’s largest markets such as the Greater Toronto Area (GTA), Montréal, Greater Vancouver, Calgary, Edmonton, and Ottawa.

The actual number of transactions came in 1.4 per cent above the same time last year and was the first national year-over-year sales increase in almost two years since June 2021.

“The rebound has been evident for a number of months at this point, but May really drove the point home with year-over-year comparisons for both national sales activity and national average home price back in positive territory,” said Larry Cerqua, chair of CREA.

“That being said, the degree to which a recovery will be able to play out on the sales side as opposed to the price side will come down to supply, which remains quite low.”

“A rebound in housing activity this year was never really in doubt because we knew the demand was there – the only question was around timing and that was answered this spring,” said Shaun Cathcart, CREA’s senior economist.

“The 2023 housing puzzle piece that was less obvious was the reluctance of existing owners to take advantage of a slower market to make a move because they don’t want to mess with the ultra-low fixed rates they locked in during the COVID-19 pandemic. Without existing owners supplying the market with new listings, this housing demand rebound may play out more acutely than might have been expected on the price side this year.”

While new supply is still running at historically low levels, the number of newly listed homes was up 6.8 per cent on a month-over-month basis in May.

The sales-to-new listings ratio was 67.9 per cent, which was only a slight change from 69 per cent in April. The long-term average for this measure is 55.1 per cent.

On a national basis, there were 3.1 months of inventory at the end of May 2023, which was down from 3.3 months at the end of April. It was also down more than a full month from the most recent peak at the end of January. The long-term average for this measure is about five months.

The Aggregate Composite MLS Home Price Index (HPI) climbed 2.1 per cent on a month-over-month basis in May 2023 which indicates a large increase for a single month. It was also broad-based, with a monthly increase in prices between April and May observed in most local markets.

The Aggregate Composite MLS HPI now sits 8.6 per cent below year-ago levels, a smaller decline than in January, February, March, and April.

The actual national average home price was $729,000 in May 2023, up 3.2 per cent from May 2022, making it the first year-over-year gain in this measure in 12 months.

The national average price has recovered by more than $116,000 since January 2023 due to outsized sales rebounds in the GTA and B.C. Lower Mainland. The exclusion of the GTA and Greater Vancouver from the calculation cuts roughly $150,000 from the national average price.

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