After hitting a 14-year low in the first month of the year, Canada's home sales hopped up by 2.3% in February compared to the month prior.
Despite this optimistic increase, the 33,621 sales seen in February were down 40% from the same time last year, new data from the Canadian Real Estate Association (CREA) revealed.
The month-over-month gains, CREA says, were led by heightened activity in the Greater Toronto Area and Greater Vancouver. Agents in these areas have noted an uptick in activity in recent weeks, but say it has been somewhat constrained by a limited number of listings, and the CREA data reflects this.
New listings dropped 7.9% month over month, "led by several large markets, particularly in Ontario," the report reads. With sales up and listings down, the sales-to-new-listings ratio soared to 58.4% -- the tightest, and most firmly in sellers' market territory, it's been since April 2022.
"February’s data contained the potential of a more robust market to come, but to repeat the bottom line from last month, we won’t know what the 2023 market has in store until the spring,” said CREA Chair Jill Oudil. “While we’re not seeing it in the sales or listings data just yet, I would expect homeowners are getting properties ready for the market and prospective buyers are getting mortgage pre-approvals."
At the end of February, there were just 4.1 months of inventory all across Canada, dropping from the 4.2 months seen at the end of January. This is a full month below the long-term average and is notably the first time that the measure has shrunk month over month since the fall of 2021.
Even as market conditions tightened, home prices continued to slide, dropping 1.1% from January to a new Aggregate Composite MLS Home Price Index of $704,300 -- down 15.8% from the market's peak. Although this may be disappointing news to sellers, a bottom to the price slide could be in sight. The February decline is about half the size of the drop seen in January and is the smallest month-over-month decline seen since March 2022.
Price drops varied from market to market, with Ontario and British Columbia markets unsurprisingly leading the way. Home prices in markets like Calgary, Regina, Saskatoon, and St. John's, however, are "barely off their peaks," CREA says.
“The similarities between 2023 and the recovery year of 2019 continued to emerge in February, with sales up, the market tightening, and month-over-month price declines getting smaller,” said Shaun Cathcart, CREA’s Senior Economist. “But the biggest similarity was a sharp drop in seasonally adjusted new listings. Future sellers, many of whom will also be buyers, are likely biding their time until the optimum time to list and buy something else. For most, that’s in the spring. Will buyers jump off the fence to snap homes up in 2023 once they finally start to hit the market? They did in 2019.”
