"Early signs" that Canada's housing market adjustment is ending: CREA

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There are “early signs” that the sharp adjustment seen in Canada’s housing markets this year has run its course.

According to new statistics from the Canadian Real Estate Association (CREA), national home sales fell 24.7% in August on a yearly basis, but were down just 1% from July.

Although it marks the sixth consecutive month of decline, it was the smallest of the six.

Activity was down in roughly half of Canadian markets, including Greater Vancouver, Calgary, and Edmonton. Gains were led by the Greater Toronto Area and a “large regional mix” of other markets in Ontario.

“August saw national sales hold steady month-to-month for the first time since February which, along with a stabilization of demand/supply conditions in many markets, could be an early sign that this year’s sharp adjustment in housing markets across Canada may have mostly run its course,” said Jill Oudil, chair of the CREA.

“That said, some buyers may choose to remain on the sidelines until they see clearer signs of borrowing costs and prices also stabilizing.”

Following the 5.9% decline seen in July, the number of newly listed homes fell 5.4% month-over-month in August.

The drop was “broad-based,” the CREA noted, with listings down in approximately 80% of local markets. Montreal was the only large market where new supply didn’t decline.

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With new listings down and sales stagnant, the sales-to-new-listings ratio rose to 54.5% from July’s 52.1%, putting it nearly on par with the long-term average of 55.1%.

August ended with 3.5 months of national inventory, a slight increase from the 3.4 months recorded at the end of July. Although still “well below” the long-term average of five months, it has risen considerably from the record-low 1.7 months seen at the start of 2022.

The Aggregate Composite MLS Home Price Index (HPI) was down 1.6% on a monthly basis in August — not a “historically” small decline, but less so than those seen in June and July.

Ontario markets, which have seen most of the recent monthly declines, were the greatest contributors to the overall national drop in August. Prices in Alberta “appear to have peaked,” while Quebec saw another month of declines.

While the HPI was still up 7.1% annually in August, it was the first single-digit jump in almost two years after the nearly 30% annual increases seen six months ago.

The actual (not seasonally adjusted) national average home price hit $637,673 in August, down 3.9% from a year ago.

The figure is “heavily influenced” by sales in the GTA and Greater Vancouver; excluding the two from the calculation cuts $114,800 from the national average price.