OTTAWA – Home sales recorded over Canadian MLS® Systems posted a small 0.7% decline between June and July 2023. Activity has been showing signs of stabilizing since May, according to a recent report by the Canadian Real Estate Association.
While sales were up in July in more than half of all local markets, a decline in the Greater Toronto Area (GTA) tipped the national figure slightly negative. Sales were also down in the Fraser Valley, which together with the GTA off set gains in Montreal, Edmonton and Calgary.
The actual (not seasonally adjusted) number of transactions in July 2023 came in 8.7% above July 2022 – 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.”
“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.”
The number of newly listed homes was up 5.6% on a month-over-month basis in July. Building on gains of 2.8% in April, 7.9% in May, and 5.9% in June, new listings have gone from a 20-year low in March to closer to (but still below) average levels by mid-summer.
With new listings outperforming sales in July, the sales-to-new listings ratio eased to 59.2% compared to 63% in June and a recent peak of 68% in April. That said, the measure remains above the long-term average for the measure of 55.2%.
There were 3.2 months of inventory on a national basis at the end of July 2023, up a bit from 3.1 months in May and June.
While this was the first month-over-month increase since January, this measure is still a full month below where it was at the beginning of 2023, and almost two months below the long-term average for this measure (about five months).
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.
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.
The actual (not seasonally adjusted) national average home price was $668,754 in July 2023, up 6.3% from July 2022.
Business Examiner Submitted/CREA