The Bank of Canada’s rate hike in June was a splash of cold water on recent housing market strength as home sales fell in June and prices fell compared to May. However, with June sales still up 1.5% from May, BMO economist Shelly Kaushik notes “it appears that a single price hike was not enough to calm the market psyche.” The Canadian Real Estate Association (CREA) latest monthly data showed total sales of 40,449 in June, up 4.7% from a year ago and close to the 10-year average of just over 43,000 sales. This represents a moderation in sales compared to the double-digit fluctuations seen in the past several years. “With sales stabilizing near historically average levels and new listings starting to catch up, housing markets appear to be stabilizing,” said Sean Cathcart, chief economist at CREA. Courtesy: CREA The number of newly listed homes continued to increase for the third straight month, up 5.9% from May. CREA noted that as new listings outperformed sales in June, the ratio of sales to new listings fell to 63.6%, down from a recent peak of 68.3% in April. Despite the slowdown in sales growth, TD economist Marc Ercolao writes that there are still “pockets of strength” in several markets, including Nova Scotia, where sales were up 7.5% month-over-month, and Manitoba (+4.8%). and Alberta (+4.7%). “This suggests a certain degree of resilience on the part of housing demand to the BoC’s rate hike last month, something that was likely worrying policymakers,” he noted. Average selling prices declined in June. The national average selling price (non-seasonally adjusted) decreased 2.7% compared to May, but was still 6.7% higher than year-ago levels. In seasonally adjusted terms, the composite of the MLS Home Price Index rose 2% month-over-month to $749,100, but remained down 4.5% compared to June 2022. “History suggests that the price side of things will respond to this with just a little bit,” Cathcart added. “Add to this the recent hikes in interest rates from the Bank of Canada, and we can probably expect rate growth to moderate in the coming months, likely to remain with a degree of upward pressure, but less than in the past three months.” Report A snapshot of home prices across the country Here’s a look at median home prices in select provinces and municipalities as of June Location Median Price Annual Price Change BC $989,523 +4.5% Ontario $910,102 +3.1% Quebec 489202-1.3% Alberta 464139 $+3.9% Manitoba 362327-3.7% New Brunswick 286500-3.7% Greater Vancouver 1,203,000-2.4% Greater Toronto $1,171 885,100-7.4% Barrie & District $824,300-8.5% Ottawa 652,700-5.7% Calgary $548,300 +4.3% Greater Montreal 516,400-4.6% Halifax-Dartmouth $528,400 +1.9% Saskatoon $381,400 +0.5% Edmonton 376,800-7.2% Winnipeg-3.5 %St. John’s $330,500 + 2.8%* Some of the movements in the above table can be somewhat misleading since average prices simply takes the total dollar value of sales in a month and divides it by the total number of units sold. On the other hand, the MLS Home Price Index takes into account differences in home type and size and adjusts to seasonality. Where does the housing market go from here? CREA also revealed its updated quarterly forecasts today, with upward revisions to average prices in both 2023 and 2024 and downward revisions to the total number of projected sales in 2023 and 2024. The end of its hiatus, with increases in June and July, means that ” A major source of uncertainty has returned to the housing market.” “However, even before rate hikes resume, the recent sales rally has already shown signs of losing steam,” the forecast continues. And while new listings are returning to sales, CREA says this likely won’t translate into continued significant gains in activity as it expects buyers to return to the sidelines barring more guidance from the Bank of Canada on its policy intentions. “Looking further afield, there is also a growing consensus that rates will not only be higher, but likely to last longer – into 2024,” the report adds. Here’s a look at CREA’s latest quarterly forecast for the Canadian housing market: National Median Home Price: 2023 Updated Forecast: $702,409 (-0.2% YoY) Previous Forecast: $670,389 (-4.8%) Updated Forecast for 2024: $723,250 (+3%) Pre-Forecast: $702,200 (+4.7%) National Home Sales: 2023 Updated Forecast: 464,239 Sales (-6.8% YoY) Pre-Forecast: 492,674 (-1.1%) 2024 Updated Forecast: 516,072 Sales (+11.2%) Previous Forecast: 561,090 (+13.9%)
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