Home sales volume also fell, falling 5.3% month-on-month. That marked the smallest decline in sales since housing activity began to slow five months ago, according to a monthly housing statistics report released by the Canadian Real Estate Association (CREA) on Monday. The report shows that housing activity is returning to pre-pandemic levels and the housing market continues to stabilize after two pandemic years that fueled Canadian housing activity with record sales prices and sales volumes. That fire was then extinguished when the Bank of Canada raised interest rates in early 2022, pushing up mortgage prices and giving buyers less bang for their buck. The GTA, Greater Vancouver and Fraser Valley, Calgary and Edmonton led the decline in home sales, which accounted for three-quarters of all local markets, according to CREA’s statement. “July saw a continuation of the trends we’ve been watching unfold for a few months; sales are down and prices are down in some relatively more expensive areas of the country as well as places where prices have risen the most over the past two years.” CREA president Jill Oudil told the national statistics report. He added that while strong demand since the start of this year has not waned, “some buyers will probably stay on the sidelines until they see what happens with borrowing costs and prices. As they re-enter the market, they will find a bit more choice, but not as much as one would expect.” Newly listed properties also fell 5.3 percent — the same rate, by the way, as home sales declined — indicating some sellers are “playing the waiting game,” according to Shaun Cathcart, senior economist at CREA.
Prices are falling but still rising year over year
Robert Hogg, assistant chief economist at RBC, told CBC News that the report shows the market is “almost in a full correction mode.” “But what we’re seeing in July is that some of that weakness is also starting to spread across the country, which we expected, given that higher interest rates are affecting almost every buyer from coast to coast,” he said. “There’s relatively more supply relative to where demand is softer and prices are starting to weaken as well, especially in Ontario.” The MLS home price index, which adjusts national numbers by volume and type of housing so that Toronto and Vancouver don’t disproportionately affect the overall picture, fell 1.7 percent month-over-month but still rose by 10.9 percent year-over-year. CREA’s statistical report shows prices fell in nine of 10 provinces in July 2022, with declines in Ontario and B.C., and a small drop in Quebec, while grasslands remained steady. In Atlantic Canada, Halifax-Darmouth fell slightly while the rest of the region continued to see prices rise at a slow but steady pace. Hogg noted that smaller markets, which saw skyrocketing price increases during the pandemic, are now seeing a major correction: among them are Ontario cities such as Cambridge, Bradford and London. While markets across the country were essentially in sync during the pandemic, there will be a “diversity of outcomes” in Canadian housing markets going forward, he said. The real national median sales price, not seasonally adjusted, fell 5 percent year-over-year in July.
