Canadian home sales continue to cool, logging another month of declining volumes. Canadian Real Estate Association (CREA) data shows home sales fell in July 2021. It was the first annual decline seen in over a year. Despite the negative factors, it was still the second biggest July for home sales ever.
Canadian Home Sales Fell 15%
Canadian existing-home sales continue to pull back from record levels. There were 53,870 homes sold through the MLS in July, down 14.9% from a month before. Compared to a year ago this represents a 15.2% decline. It was the first time in over a year that home sales have seen negative annual growth.
Canadian July Real Estate Sales
The unadjusted number of home sales for all types, as reported through the Canadian MLS for the month of July.
Source: CREA; Better Dwelling.
Home Sales Are Down 28% From This Year’s Peak
This is a huge drop for home sales, continuing the trend of a market slowdown. July managed to be the fourth consecutive month to see home sales decline, after peaking in March. Sales have fallen about 28% from that peak. Even though it was the second biggest July ever, that’s a substantial decline in activity.
Canadian Real Estate Sales
The unadjusted sales for all home types, as reported through the Canadian MLS.
Source: CREA; Better Dwelling.
Will Activity Pick Up In The Fall, Like Last Year?
The pandemic didn’t just disrupt your sleep schedule, but it also screwed up real estate sales. Looking at the above sales overlay, you can see the seasonal norms are disrupted. Volume for 2020 peaks much later in the year than typical. This was due to the initial lockdown delaying the Spring market.
Looking at 2021, we can see home sales peaking in March — much earlier than usual. The mix of reads has made the end of the year a bit of a mystery.
Many observers think the end of the year will see a surge in activity, not unlike last year’s trend. That would be a little difficult for buyers, since the increase last year was the result of rate cuts. Falling rates tend to pull buyers forward, since they allow more debt to be carried cheaply. With rates near record lows, and many forecasting higher rates, this has a lot working against it. It might happen, but the macros aren’t in favor.
Sellers on the other hand, might still be waiting for a Fall surge in activity like last year. If that’s the case, and a buyer surge doesn’t happen, expect the pressure on prices to move higher to die.
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Prices are not falling, what does this all mean? I think prices will keep climbing due to all the magic money we printed.
I think the prices are more closely related to the low interest rate and lack of supply. When either of those two things (or both) change directions, the prices will likely fall.
The only other factor I can see changing pricing is the market sentiment/psychology surrounding home ownership. But, alas, I don’t see that changing before the interest or supply.