Canadian home sales are coming down from the all-time record high hit earlier this year. Seasonally adjusted home sales fell in May, shows Canadian Real Estate Association (CREA) data. Home sale activity still remains elevated, even printing another monthly record. However, sales dropped in 80% of markets across the country, and are falling fast. With factors like interest rates still in favor of buyers, this may be showing a change in sentiment.
Canadian Home Sales Fell 7% In May
Canadian home sales through the MLS fell last month, but remain robust. Seasonally adjusted sales were reported at 56,156 in May, down 7.4% from the previous month. Unadjusted sales were 103.6% higher than a year before, but the rate had little meaning. Since this is heading in two different directions, let’s add a little context so it makes more sense.
Canadian Real Estate Sales
The unadjusted sales for all home types, as reported through the Canadian MLS.
Source: CREA; Better Dwelling.
Home Sales Fell Sharply From Peak Activity
Falling monthly home sales show some degree of market cooling from peak activity. In March, home sales on the MLS reached an all-time record high, as the market reached its fevered pitch. The month afterward it fell sharply from the squeeze. May followed with a second monthly decline in sales. Slower than peak, but busier than the market would typically be at this time.
Even With The Drop, It Was A Record May
Home Sales Fell In 80% of Markets, Showing This Is Isn’t Regional
The rate of annual growth for home sales looks astronomical, but there is a huge skew in the data. Last May, the rules for homebuyers weren’t yet clarified and had most people stuck at home. This artificially restricted activity, causing a base effect. Home sales are 103.6% higher than last year, but “only” 26.7% higher than the 10-year median for May sales prior to that. Still very large growth, just not quite as large as the base effect makes it seem. It’s still a record high for the month of May, which gives an idea of how overheated the market was earlier this year.
Canadian May Real Estate Sales
The unadjusted number of home sales for all types, as reported through the Canadian MLS for the month of May.
Source: CREA; Better Dwelling.
CREA said earlier this year they expect home sales to cool naturally, and it’s happening. About 80% of markets have seen a decline in home sales, according to them. This indicates it’s not just a regional issue that’s causing a slowdown, but a country-wide one. Since most factors like interest rates haven’t changed much, one can conclude it’s just a shift in sentiment.
CREA said this may be due to positive factors, such as high vaccination rates. As the economy gets back to normal, more people will resume doing activities outside of the home. This involves a little extra money, and helps to break the obsession with housing one faces when stuck at home. Combine this with fewer people able to buy at these levels, and it’s been a popular take from economists.
Like this post? Like us on Facebook for the next one in your feed.