Canada’s housing market continued to cool down from its red-hot pandemic pace in May, with the average price of a Canadian home that sold during the month going for $711,000, a decline of more than $100,000 in the past three months.
While May is typically a strong month for home sales, the Canadian Real Estate Association (CREA) said Wednesday that the volume of homes that sold fell precipitously during the month, down by 20 per cent compared with the same period a year ago.
The slowdown means that home sales are now finally back to the level they were at before the COVID-19 pandemic, the realtor group said.
After cooling down in March and April 2020 as the pandemic was unfolding, Canada’s housing market has rebounded strongly, with selling prices and sales volumes setting record high after record high for much of the past two years.
But that momentum has shifted noticeably in recent months, as lending rates that were slashed early in the pandemic start to rise, making mortgages more expensive and reducing buyers’ purchasing power.
CREA says the average price of a home that sold on its Multiple Listing Service last month went for $711,000. That’s down by more than 13 per cent from the all-time high of $816,720 set back in February 2022.
“Ultimately this has been expected and forecast for some time — a slowdown to more normal levels of sales activity and a flattening out of prices,” CREA’s chief economist Shaun Cathcart said in a release.
CREA says the average price figure can be misleading because it is easily skewed by sales in large expensive markets like Toronto and Vancouver. So it calculates another number, known as the House Price Index (HPI), which it says is a better gauge of the market because it adjusts for the volume and types of housing.
The HPI edged down by 0.8 per cent in the month, CREA says, following a 1.1 per cent decrease in April. But it is still more than 19 per cent higher than it was last year, mostly because of the eye-popping gains seen in late 2021.
The same can be said of the average price figure, which is still 3.4 per cent higher than it was a year ago, despite three monthly declines in a row.
Different trends across the country
If Toronto and Vancouver are stripped out of the numbers, the average price of a Canadian home that sold in May was $588,500.
The biggest factor driving the national number lower is Ontario, where most markets are seeing significant price declines.
Vancouver Island saw prices increase, while Vancouver was flat and the rest of B.C. saw mostly declines.
“Prices were more or less flat across the Prairies save for small gains in Saskatoon and Winnipeg,” CREA said. “Meanwhile, Quebec, New Brunswick and P.E.I. continued to outperform with notable gains, while prices in Nova Scotia and Newfoundland and Labrador edged up slightly.”