Home sales continue to fall across the country, but the decline is slowing

Although Canadian home sales continue to fall across the country, a new report suggests the rate of decline is slowing.

The Canadian Real Estate Association confirmed in a new market update that sales are down in about three-quarters of all local markets, led by the Greater Toronto Area (GTA), Greater Vancouver and the Fraser Valley, Calgary and Edmonton.

“July saw a continuation of the trends we’ve been watching unfold for a few months now; sales winding down and prices easing in some relatively more expensive parts of the country as well as places where prices rose most over the past two years,” said Jill Oudil, Chair of CREA. “That said, the demand that was so strong just a few months ago has not gone away, but some buyers will likely stay on the sidelines until they see what happens with borrowing costs and prices”

According to the latest figures, home sales fell 5.3 per cent between June and July of this year. It is the fifth straight month with a drop in housing activity, but it is also the smallest drop during that time.

“One new piece of the puzzle was the decline in new listings in July. It was of the same magnitude as the decline in sales, and in many of the same parts of the country,” said Shaun Cathcart, CREA’s senior economist. “It’s only one month of data at this point but it suggests that some sellers are also playing the waiting game, and that is with an overall inventory of homes for sale that is still historically low. The Bank of Canada is also expected to finish up their remaining rate hikes (100 basis points or so) over the next few months, which five-year fixed mortgage rates have mostly already priced in. We’ve already witnessed a sharp housing market adjustment this year, but it will hopefully be short-lived if conditions continue to show signs of stabilizing,” said Cathcart.

The actual (not seasonally adjusted) number of transactions in July 2022 came in 29.3% below that same month last year.

As for home prices, they were down just 1.7 per cent month-over-month, but the non-seasonally adjusted Aggregate Composite MLS® HPI was still up by 10.9 per cent on a year-over-year basis in July.

Recently, the Royal Bank suggest a massive housing correction of as much as 50 per cent could hit Canada in 2023.

New home listings also scaled back by 5.3 per cent on a month-over-month basis in July. According to the CREA, “the decline in new supply was broad-based, with listings decreasing in about three-quarters of local markets, including most large markets.”

Most of the monthly declines in recent months have been in markets across Ontario and, to a lesser extent, in British Columbia.

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