National home sales edged down 0.7% month-over-month in July but were up 8.7% above July 2022, according to a report released Tuesday by the Canadian Real Estate Association.
The report said the number of newly listed properties rose 5.6% month-over-month. The MLS® Home Price Index (HPI) climbed 1.1% month-over-month and was down just 1.5% year-over-year. The actual (not seasonally adjusted) national average sale price posted a 6.3% year-over-year increase in July.
CREA said home sale activity has been showing signs of stabilizing since May.
But the number of transactions in July was the largest year-over-year national sales increase in more than two years.
“July continued along the same trend we’ve seen emerge in recent months, with sales levelling off and new listings returning in more normal numbers,” said Larry Cerqua, Chair of CREA. “This has been giving buyers more choice and balancing the market, which as of July was also slowing the rate of price growth. If you’re looking for information and guidance about how to buy or sell a property, contact a REALTOR® in your area,” continued Cerqua.
“Following a brief surge of activity in April, housing markets have settled down in recent months, with price growth now also moderating with its usual slight lag,” said Shaun Cathcart, CREA’s Senior Economist. “Sales and price growth are already showing signs of tapering off further in August in response to the Bank of Canada’s mid-July rate hike and messaging regarding above-target inflation for longer than previously expected. We’re probably looking at another round of ʻback to the sidelines’ for some buyers until there’s a higher level of certainty around interest rates going forward.”
CREA said the Aggregate Composite MLS® Home Price Index (HPI) climbed 1.1% on a month-over-month basis in July 2023—a larger-than-normal increase for a single month but only about half as large as the gains recorded in April, May, and June. This is in line with sales having levelled off as new listings have been recovering.
“Despite the smaller gain at the national level, a monthly increase in prices between June and July was still observed in the majority of local markets as has been the case since April,” said the report.
“The Aggregate Composite MLS® HPI now sits just 1.5% below year-ago levels, the smallest decline since October 2022. Year-over-year comparisons will likely tip back into positive territory in the months ahead because prices continued to decline through the second half of 2022.”
Rishi Sondhi, Economist with TD Economics, said higher interest rates are having an impact on the housing market, just as the Bank of Canada intended when it resumed hiking rates in June.
“That said, the minor dip in sales last month indicates some durability to demand in the face of rising borrowing costs. Notably, conditions in some markets are much firmer than others. Calgary stands out as a glaring example, as sales actually increased 9% since the Bank re-started hiking its policy rate, likely supported by robust interprovincial migration and decent affordability, among other factors. On the opposite end, sales have plunged by 16% in Toronto, where affordability has deteriorated sharply, since May,” said Sondhi.
“With sales dipping and resale supply on the rise, markets are moving towards being more balanced. Average prices declined for the second straight month, but this measure can be impacted by compositional issues (i.e. lower valued properties accounting for a large portion of sales, driving down the average price). Notably, benchmark prices are up 3% since the Bank of Canada re-started its rate hiking campaign, pointing to some resilience in the underlying trend in home prices.”
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