A surge in new listings but a lack of demand from buyers is putting the Canadian housing market in its “most balanced” position since before the COVID-19 pandemic, the national real estate organization says.
The Canadian Real Estate Association (CREA) said Wednesday that home sales fell 1.7 per cent between March and April.
Sellers, however, were coming out of the woodwork to boost the number of newly listed homes by 2.8 per cent month-to-month.
A slowdown in sales but a boost in listings led to a 6.5 per cent jump in the overall number of homes on the market, hitting the highest level since just before the COVID-19 pandemic began, CREA said. It also marked the second biggest month-over-month jump in overall properties up for sale.
“After a long hibernation, the spring market is now officially underway,” said CREA chair James Mabey in a statement. “The increase in listings is resulting in the most balanced market conditions we’ve seen at the national level since before the pandemic.”
The sales-to-new listings ratio meanwhile eased to 53.4 per cent, just below the long-term average of 55 per cent.
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Mabey noted that with mortgage rates still high and no interest rate cuts from the Bank of Canada yet, many buyers are still sidelined and unable to break into the market.
“But, for those who can, it’s the first spring market in some time where they can shop around, take their time and exercise some bargaining power,” he said.
Home prices are also holding steady, with little change in CREA’s Home Price Index for the third consecutive month.
The national average home price in April was $703,446, down 1.8 per cent from last year, CREA said.
The association highlighted Calgary, Edmonton and Saskatoon as the exceptions from the trend, with each market reporting prices steadily ticking higher since last year.
There are a few possible explanations for why listings were trending higher, according to Daren King, CFA with National Bank.
King said in a note to clients Wednesday that sellers might be more confident they can get the price they’re hoping for this spring, or it could be a sign of distress among owners who are struggling with higher mortgage payments. He said he expects levels of forced selling are still “marginal,” but could be something to watch in the coming months as Canada’s economy continues to show signs of slowing.
King said that in the months ahead, strong population growth and hope for interest rate cuts from the Bank of Canada could boost activity in the housing market, but that these forces are also offset by a possible deterioration in the labour market and “still-horrendous affordability conditions.”
“This explains why we remain at best cautiously optimistic about the magnitude of a possible rebound in the housing market going forward,” King wrote.
Housing starts also slow in April
In a separate report released Wednesday, the Canada Mortgage and Housing Corp. says the annual pace of housing starts in April edged down one per cent compared with March.
The national housing agency says the seasonally adjusted annual rate of housing starts in Canada came in at 240,229 units for April, down from 242,267 in March.
The overall drop came as the annual pace of starts in urban centres amounted to 220,123 units for April compared with 220,358 in March.
The pace of multi-unit urban starts in April fell one per cent to 178,462, while single-detached urban starts rose two per cent to 41,661 units.
The annual pace of rural starts was estimated at 20,106 units.
CMHC says the six-month moving average of the monthly seasonally adjusted annual rate was 238,585 units in April, down 2.2 per cent from 243,907 units in March.
– with files from The Canadian Press
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