Home sales recorded over Canadian MLS systems posted a 4.1% decline between July and August but the number of transactions were still 5.3% above a year ago, according to data released Friday by the Canadian Real Estate Association.
Alena Darmel
“With sales slowing and new listings returning to more normal levels, demand and supply are continuing to come into better balance” said Larry Cerqua, Chair of CREA. “This is giving buyers more time and more choice.”
“August was the first full month of housing data following the Bank of Canada’s July rate hike, so a dip in activity was expected,” said Shaun Cathcart, CREA’s Senior Economist. “The demand is obviously still there, and it will be back, but as the housing affordability crisis re-emerges as a top policy issue, for now, the slowdown on the buyer side should help keep a lid on prices.”
CREA said the number of newly listed homes edged up 0.8% on a month-over-month basis in August, a small increase following a cumulative gain of more than 24% between March and July. New listings started off 2023 at a 20-year low but are now closer to average levels.
With sales falling and new listings edging up in August, the sales-to-new listings ratio eased to 56.2% compared to 59% in July and a peak of 67.4% in April. The measure is now back in line with its long-term average of 55.2%, it said.
The CREA report said there were 3.4 months of inventory on a national basis at the end of August 2023, up from 3.2 months in July. While the measure is up a bit from its recent low of 3.1 months in May and June, it remains below the second half of 2022 and well below its long-term average of about five months.
The Aggregate Composite MLS Home Price Index (HPI) edged up 0.4% on a month-over-month basis in August 2023— only about half as large as the July gain, which was only about half as large as the gains recorded in April, May, and June. This levelling off of prices is in line with slowing sales and a rebound in listings, added CREA.
“While prices are stabilizing at the national level, regional differences are re-emerging. Price growth has remained solid in Quebec and the East Coast, followed by British Columbia and the Prairies. Ontario is now a mixed bag, still with some of the bigger increases but also some of the bigger declines.
“As of August 2023, the Aggregate Composite MLS HPI was up 0.4% on a year-over-year basis. This was the first year-over-year increase since September 2022. Even though prices appear to be levelling out near current levels, year-over-year comparisons will likely continue to rise in the months ahead because of how prices continued to decline through the second half of 2022.
“The actual (not seasonally adjusted) national average home price was $650,140 in August 2023, up 2.1% from August 2022.”
Rishi Sondhi, Economist with TD Economics, said there were no surprises in the report, as higher borrowing costs continue to weigh on home sales, with August’s monthly decline being the steepest since July of last year.
“This weaker sales backdrop is helping to quickly bring markets back into balance, with the sales-to-listings ratio dropping by 10 ppts since May. Supply is also an important part of this rebalancing story, as listings have posted gains for 5 straight months. While their level still remains low by historical standards, we’ll be monitoring for any potential signs of forced selling moving forward, amid higher rates and what should be a deteriorating jobs market,” said Sondhi.
“Benchmark prices managed to tick higher last month, pointing to some underlying resilience in prices, despite falling demand. However, average prices (which are more influenced by transactions on either end of the price spectrum) declined yet again. Moving forward, we expect another decline in average home prices to manifest in the fourth quarter.”
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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