Canada’s housing slump is officially over—in the opinion of a small share of buyers, apparently. The rest of Canada? Nah. Canadian Real Estate Association (CREA) data shows home prices climbed in May. Sales and new listings both fell, delivering a slightly tighter market than last year. However, the demand balance remains at a level not seen outside of the early 90s real estate crash.
Canadian Real Estate Prices Climb For 4th Straight Month
CREA composite HPI: The unadjusted price of a typical home.
Source: CREA; Better Dwelling.
The price of a typical home climbed 0.23% (+$1.5k) to $667,700 in May, marking a fourth straight increase. Prices remain 4.12% (-$28.7k) lower than last year, and 20.6% (-$173.6k) below the record high set in March 2022. In other words, there’s positive momentum, but a long way to go before anything that resembles a recovery.
Canadian Real Estate Sales Fall, Weakest May In At Least 20 Years
Canadian real estate sales: Unadjusted, May.
Source: CREA; Better Dwelling.
Climbing prices weren’t driven by sales. There were 49,525 sales in May, down 5.1% from last year. The drop is enough to make it the weakest May volume in at least 20 years. This is a much weaker turnout than expected for what’s usually the seasonal peak for the market.
Fewer New Home Listings, But A Lot More Sellers Than Usual
Canadian real estate new listings: Unadjusted, May.
Source: CREA; Better Dwelling.
The drop in sales is only beaten by the fall in new listings. There were 101,270 new listings in May, 7.9% fewer than last year. It’s a sharp drop but considering last year was a record high, there’s no need to panic about dwindling inventory. We need to go all the way back to 2017 to find another May with more new listings. The surge in 2017 was just ahead of Ontario implementing its non-resident buying tax.
The drop in new listings was larger than the one in sales, boosting relative demand. The sales-to-new-listings ratio (SNLR) came in at 46.4% in May, climbing 1.3 points from last year. At a macro level, this is considered a balanced market priced right for the scale of demand. But it’s important to understand that the industry’s guidelines only provide a general overview. A divergence from the normal range is a much stronger signal, and this one is worth paying attention to.
The SNLR has little precedent in this range, so “balanced” isn’t necessarily balanced. Aside from this May and May 2025, one has to go all the way back to 1995 to find another report where it fell below 50% in May. The SNLR is at similar levels to the early 90s, when Canada’s last major real estate crash occurred. A real estate correction where prices don’t actually correct, eh? How unique.
