Despite an interest rate hike, demand for homes continued to grow across Canada in June, with sales up 1.5% from the month prior.
New statistics from the Canadian Real Estate Association (CREA) released on Friday reveal an increase in home sales in more than half of all local markets, with gains in British Columbia and Alberta offsetting a drop in the Greater Toronto Area. Notably, the 1.5% bump in sales from May to June is a smaller increase than was seen from April to May, hinting at a possible market stabilization.
On a year-over-year, not-seasonally-adjusted basis, however, June sales were up 4.7% -- the largest annual increase in national home sales in two years.
“Housing markets appear to be stabilizing heading into the summer following some big ups and downs over the last year,” says Larry Cerqua, Chair of CREA. “Most importantly, the recovery in new listings over the last few months will give buyers more choice and should help to slow price growth over the second half of the year."
Indeed, new listings -- a serious lack of which have plagued housing markets all across the country -- were up 5.9% month over month in June. This built on the 3.1% and 7.5% gains seen in April and May, respectively, and helped to bring new listings up from the 20-year low seen in March and "closer to (but still below) average heading into the summer," CREA says.
CREA'S Senior Economist Shaun Cathcart notes that with listings "finally starting to play catch up," the housing market appears to be settling down. The sales-to-new-listings ratio eased to 63.6%, which, although still well above the long-term average of 55.2%, is down from the 68.3% peak seen in April.
At the end of June, there were 3.1 months' worth of inventory, which is unchanged from May but down more than a full month from the most recent peak at the end of January. The long-term average for this measure, CREA notes, is around five months.
“History suggests the price side of things will respond to this with only a slight lag," Cathcart says of Canada's new listing levels. "Add to that the recent Bank of Canada rate hikes, and we can probably expect price growth to moderate in the months ahead, likely still with some degree of upward pressure, but less than in the last three months.”
Prices in June did see some upward pressure, with the Aggregate Composite MLS Home Price Index climbing 2% month over month -- "a large increase for a single month on the heels of similar gains in April and May," CREA says. Prince increases were seen across the board, with most local markets experiencing a jump. The Aggregate Composite MLS HPI came in 4.5% below year-ago levels, which CREA notes is the smallest decline since November 2022.
The actual, not seasonally adjusted average home price of $709,218, on the other hand, was up 6.7% year over year, but down from the $729,000 average seen in May.