Housing markets across the country continued to lose steam in August following the latest Bank of Canada rate hikes in June and July. Everywhere outside of Alberta and parts of Atlantic Canada, that is.
While existing national home sales (seasonally adjusted) were down 4.1% in the month, they do remain up 5.3% compared to last August’s weak activity.
Home prices also continued to ease, with the MLS Home Price Index, which adjusts for seasonality, up just 0.4% in August, well below the 2% monthly gains seen in the spring. On a non-seasonally adjusted basis, the national average home price fell to $650,140. While that’s up 2.1% compared to a year ago, it’s down over 20% from the peak reached in February 2022 of $816,720.
“It’s now been two months since the Bank of Canada last hiked interest rates, and it’s clear that Canada’s housing market has responded,” wrote Marc Desormeaux, principal economist at Desjardins. “The sales and price momentum that built up during the central bank’s initial holding period has obviously stalled, and we’re seeing weakness spread increasingly beyond the highest-priced cities.”
August marked the second consecutive monthly decline in existing home sales.
CREA also reported that the number of newly listed homes edged up another 0.8% on a monthly basis, with the total cumulative gain since March now standing at 24%.
This caused the sales-to-new listings ratio to ease to 56.2%, down from 59% in July and a peak of 67.4% in April. Supply also ticked up to 3.4 months of inventory from 3.2 in July.
“August was the first full month of housing data following the Bank of Canada’s July rate hike, so a dip in activity was expected,” said Shaun Cathcart, CREA’s senior economist. “The demand is obviously still there, and it will be back, but as the housing affordability crisis re-emerges as a top policy issue, for now, the slowdown on the buyer side should help keep a lid on prices.”
Source: CREA – Canadian Real Estate Association
