A report released Thursday by the Canadian Real Estate Association (CREA) indicates national home sales climbed 5.1 per cent month-over-month in May and MLS sales were up 1.4 per cent from a year ago.
Max Rahubovskiy
The report also found that the number of newly listed properties rose 6.8 per cent month-over-month but is still historically low and 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 national average sale price posted a 3.2 per cent year-over-year hike.
“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.”
CREA said the Aggregate Composite MLS Home Price Index (HPI) climbed 2.1 per cent on a month-over-month basis in May 2023 – a large increase for a single month and on the heels of a similar gain in April. Once again, it was also very broad-based, with a monthly increase in prices between April and May observed in the majority of 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.
It also said the national average home price was $729,000 in May 2023, up 3.2 per cent from May 2022. This was 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 owing in large part to outsized sales rebounds in the GTA and B.C. Lower Mainland. Excluding the GTA and Greater Vancouver from the calculation cuts almost $150,000 from the national average price, it added.
Rishi Sondhi, Economist with TD Economics, said monthly sales gains from February through May have come amid lower interest rates, a healthy job market, robust population growth, and a jolt to buyer psychology from a Bank of Canada that was previously on pause.
“However, the Bank took their policy rate higher last week and we expect another 25-bps hike in July. Meanwhile, bond yields are on the rise. This higher rate backdrop should manifest into weaker sales growth in the back half of this year, reinforced by a jobs market that should also be softening,” he said.
“Weaker sales activity should take some of the steam away from price growth in coming months. However, for a multitude of reasons, markets remain heavily supply constrained (even with today’s gain in new listings), which should keep home prices on the rise in the near-term.”
Mario Toneguzzi
(Mario Toneguzzi is Managing Editor of Canada’s Podcast. He has more than 40 years of experience as a daily newspaper writer, columnist, and editor. He was named in 2021 as one of the Top 10 Business Journalists in the World by PR News – the only Canadian to make the list)
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