The national housing market slowed last month, with sales and prices falling between July and August as the Bank of Canada’s latest interest rate hike rattled buyers.
Sales totaled 38,345 in August, seasonally adjusted, down 4.1% from the previous month, the Canadian Real Estate Association (CREA) said on Friday. The actual number of sales stood at 40,257 in August, up 5.3% from the same month last year.
The market slowdown could be a welcome sign for buyers, who saw real estate costs skyrocket during much of the COVID-19 pandemic only to face a rapid succession of rate hikes. interest as prices began to fall.
The Bank of Canada dealt another blow to would-be buyers in July, making August the first full month in the new interest rate environment.
However, CREA President Larry Cerqua noted a return to some stability in the market, despite lower sales in August due to declines in Metro Vancouver and British Columbia’s Fraser Valley, at Montreal, Ottawa, Hamilton and Burlington, Ontario, as well as London and St. Thomas, also Ontario.
“With sales slowing and new listings returning to more normal levels, demand and supply continue to balance,” he said in a press release.
“It gives buyers more time and more choice. »
Mr Cerqua’s observations were based on the number of new registrations, which reached 69,438 last month, an increase of 5.5% compared to August 2022. The seasonally adjusted number fell by a fifth consecutive month, totaling 68,276, up less than 1% from July.
The flow of sales listings is much stronger than seen earlier in the year, and is now even in line with pre-COVID-19 norms, observed Robert Kavcic, senior economist at BMO Capital Markets .
“After a shortage of new listings earlier this year helped drive prices higher, supply is now coming to market at a rate consistent with historical norms,” he said in a note to investors .
“This, combined with weak sales, continues to soften the market balance significantly. »
The seasonally adjusted average price of a property in August decreased 2.3% from July to $674,184, while the actual price increased 2.1% from a year earlier for reach $650,140.
Although housing affordability remains a “significant issue,” recent second-quarter data shows an uptick in first-time homebuyers, said Sherry Cooper, chief economist at Dominion Lending Centers.
The ACI noted that regional differences were also re-emerging.
Price growth remained strong in Quebec and the East Coast, followed by British Columbia and the Prairies, the report said.
“There’s a little bit of everything in Ontario, some of the biggest increases, but also some of the biggest declines. »
Ms. Cooper predicts that the Bank of Canada will move away from rate hikes and that supply will gradually return, which will contribute to the recovery of real estate activity in the months to come.
“Year-over-year housing prices will increase due to the rolling effect, as lower prices were posted in the fall and winter of last year, making comparisons d ‘more favorable year over year,’ she explained in a note to investors.
“We don’t want to see an explosion of activity, because that could cause the central bank to reconsider its pause on rate [hikes]. »
