The national real estate market’s cooling continued with home sales falling again in June, but the Canadian Real Estate Association said the decreases are smaller than those seen in previous months.
The association revealed Friday that June home sales amounted to 48,176, a 24% drop from 63,280 during the same month last year.
On a seasonally adjusted basis, sales were down almost 6% from May.
The association attributed the drops, which were not as large as those seen in April and May, to financial pressures prospective buyers have experienced as the Bank of Canada has continued to hike its key interest rate.
The central bank increased its key interest rate on Wednesday by one percentage point to 2.5% in the largest hike the country has seen in 24 years, but CREA said the rate’s previous increases were already transforming the market last month.
“Sales activity continues to slow in the face of rising interest rates and uncertainty,” said Jill Oudil, CREA’s chair, in a news release.
“The cost of borrowing has overtaken supply as the dominant factor affecting housing markets at the moment, but the supply issue has not gone away.”
Oudil’s observations mirror what real estate agents have been reporting for months: the market is cooling.
In typically heated markets like the Greater Toronto and Greater Vancouver Areas, they have noticed homes sitting for sale for far longer than they would have last year or at the start of the year, when the pace of sales was torrid.
Buyers are now waiting on the sidelines to see just how much purchasing power they could lose as rates climb, but have also put off making offers because forecasts have lead them to believe prices will drop even further.
Last month, CREA predicted the national average home price will rise by 10.8% on an annual basis to $762,386 in 2022. It forecast the largest price gains for Maritime provinces, followed by Ontario and Quebec.
The national average home price in June fell 2% from the same month last year to $665,849 and, on a seasonally adjusted basis, was down 4% from May.
The lower prices mean it’s the buyer’s “time to shine,” said Wins Lai, a Toronto broker.
Even though rates are up, she said it’s a particularly good time for first-time homebuyers to get into the market because prices aren’t as high as they previously were and listings are up.
The association found new listings climbed by 4% month-over-month and 10% year-over-year.
Much of the frenzy has dissipated too.
“Most of my colleagues that are trying bidding wars … they only got one offer because the amount of buyers has definitely slimmed down,” she said.
“They look at the rates and they look at their investment and they say, ‘hey, does this make sense?”’
For sellers, it’s “a tough pill to swallow,” she added.
Most of June’s declines in price came from Ontario, but CREA also detected an easing in B.C. and prices tend to be “more or less flat” in the Prairies.
Quebec is showing small signs of declines and on the East Coast, prices are continuing to rise but have stalled in Halifax-Dartmouth, CREA said.
On a national scale, Ksenia Bushmeneva of TD Economics feels price relief will continue.
“The Bank of Canada isn’t done yet and is expected to continue taking rates higher through the rest of this year (although perhaps not at such a breakneck pace),” the economist wrote in a note.
“As such, we expect that home prices and sales will move even lower amid further pressure from borrowing costs.”
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