Canadian Real Estate Industry Cuts Existing Home Sale Forecast By Thousands of Units

The Canadian real estate rollercoaster continues, as expectations temper from recent highs. The Canadian Real Estate Association (CREA) released its quarterly forecast for existing-home sales. The industry organization is still expecting a record number of home sales this year. However, the rapidly changing environment has led them to cut expectations by thousands of units. Over just a few months their forecast has changed, they now forecast billions less in real estate will be sold. 

Canadian Home Sales Forecast Growth Cut By 3.5 Points, But A Record Still Expected

Canadian existing home sales got a big cut to this year’s forecast sales. The industry organization is now forecasting 682,867 home sales in 2021, an increase of 23.8% from last year. The revision is about 19,100 home sales less than they had forecast in March, or a drop of 3.5 points to the annual growth. The year is still expected to be a very large one, but expectations got a big cut over the past three months. 

Canadian Real Estate Sales Forecast

The forecast volume of existing-home sales for 2021 and 2022. Included is the June (current) forecast, as well as the March forecast (previous).

Source: CREA; Better Dwelling.

Next Year Is Forecast To Be Busy, But Moderate From This Year’s Activity

The association still expects home sales to cool next year, but more than previously expected. Sales are forecast to fall to 593,994 in 2022, down 13% from this year’s expected numbers. The decline is 19,580 units less than forecast in March, with the annual rate of growth 0.4 points lower. Once again, this is also a very large number of home sales forecast next year. It’s even larger than busy pre-pandemic years like 2016 and 2017. Expectations are adjusting though, as home sales come in much weaker than forecast.

Canadian Real Estate Sales Forecast

The forecast volume of existing-home sales for 2021 and 2022. Included is the June (current) forecast, as well as the March forecast (previous).

Source: CREA; Better Dwelling.

Canadian existing home sales are forecast to have a big year  — the largest on record. Next year is also expected to be very large, second only to this year’s home sale numbers. However, expectations are changing very fast, as reality fails to meet ambitious forecasts. The downward revision may seem small, but that’s because the numbers are so large. At the average home sale price, the dollar value of the forecast revision is a decline of ~$14 billion  —  a big shift in expectations over just 3 months. Obviously, this forecast only sticks if buyers don’t continue to drop out of the market faster than the industry expects, as was this case between these two forecasts. 

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6 Comments

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  • Sarah 1 year ago

    I would like to know what factors CREA considers when they forecast the sales in 2022.

    • WS 1 year ago

      It’s mostly marketing and fluff seeking headlines.

      • Dave 1 year ago

        Artificial land scarcity. Toronto is not on an island like London england, stop comparing yourself to new York also.

  • V 1 year ago

    CREA is full of sh!t! First they make it look like were going to have record year during start of major buying season to make people FOMO. Now that it’s halfway through June there telling us the information they already knew before the start of buying season. Are they bias? Ofcourse! Can they be counted on for accurate info? HELL NO!

    • Old Greg 1 year ago

      Mr V, the whole RE industry is full of you know what.. Unfortunately the vast majority of the population is so naïve that it’s actually sad.. Agents whole job is to sell for as much as possible and pump this mega bubble, I am getting super excited as inflation ramps up and rates will have to head higher or otherwise the dollars value is going to die. You see most people cannot comprehend that it is not the house price accelerating as much as it is the currency devaluing in real terms.

      • Itchy Bear 1 year ago

        “I am getting super excited as inflation ramps up and rates will have to head higher or otherwise the dollars value is going to die.”
        Isn’t killing the dollar’s value the point of this whole exercise? Make the dollar more competitive so there are more jobs paying wages noone can live on… You’re talking feature, not bug.

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