Residential Mortgage Commentary - As autumn arrives the market cools further
Home sales in Canada declined for a sixth straight month in August according to the latest report from the Canadian Real Estate Association. Compared to July the number of properties changing hands dipped by a modest 1.0%, the smallest drop so far. Year-over-year, sales are down 24.7%.
Home prices also continue to slip. The national average price is down almost 4.0% from last August, at just shy of $638,000. That is a 20% drop from the peak in February, just before the Bank of Canada started raising interest rates. Taking Toronto and Vancouver out of the calculation drops the average price to $523,000.
CREA’s preferred measure of home prices, the Composite Aggregate Home Price Index, shows a 1.6% drop between July and August. But year-over-year there is a 7.1% increase.
New listings are down again, falling by 5.4% in August. That puts the sales-to-new listings ratio at 54.5%, up from 52.1% in July, but very close to the long-term average of 55.1%.
“Some buyers may choose to remain on the sidelines until they see clearer signs of borrowing costs and prices also stabilizing,” said Jill Oudil, Chair of CREA.
Looking ahead, CREA expects to see 532,545 properties trade hands in 2022, a decline of 20% from the record high set in 2021. For 2023 the forecast calls for a further pullback of 2.3% to 520,156 units.
The national average home price is forecast to rise by 4.7% to $720,255 in 2022, with a very modest 0.2% increase, to $722,000, for 2023.