The Bank of Canada’s decision to maintain the policy rate at 5% was well-received by the real estate market this week, especially after the consecutive rate hikes earlier this summer, which had a dampening effect on sales nationwide.
According to the Canadian Real Estate Association (CREA), national home sales declined by 0.7% month-over-month in the latest report, primarily driven by decreases in the Greater Toronto Area.
Locally, August witnessed a notable drop in the number of units sold, falling below 600 for the first time in a decade, with a 14.2% decrease compared to August 2022, resulting in only 568 sales. While this decline is significant, the absorption rate has remained steady and favorable for sellers, with only a slight increase in inventory over the summer. Currently, there is a 1.78-month supply of inventory in the market.
These persistently low inventory levels have triggered a resurgence in prices, bouncing back after reaching their lowest 12-month rolling average since January 2022, which occurred in May of this year when the median price was $725,000. Since May, we have observed a consistent monthly increase of 0.6%, bringing us to our current median price of $740,000.
On the national level, housing starts across Canada experienced a 10% decline month-over-month, as reported by the Canada Mortgage and Housing Corporation (CMHC), following an astonishing 41% surge in June, marking the most significant monthly increase in the past decade. The seasonally adjusted total housing starts stood at 254,966 units in the latest report, compared to 283,498 units the previous month. These fluctuations can be attributed to rising construction costs and persistent labor and supply challenges affecting Canada’s homebuilders.
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Statistics compiled from information available on the ITSO Database as of September 5, 2023. The Median Historical Sale Price in the graphic represents year-to-date value. All other values represent a 12 month rolling.