Fewer homes changed hands in July, but Canadian property remains inaccessible to many new buyers.
Canadian Real Estate Association (CREA) reports home sales in the country fell by 3.5% compared with June, the fourth consecutive month of decline. Sales fell 28% from their peak in March.
Despite the slowdown, it was the second busiest July on record.
Sales fell in two-thirds of all local markets, led by Edmonton and Calgary. CREA believes this may be due to the fact that sales in these two cities have just started to fall. Sales in Montreal rose after a slowdown earlier in the year.
Despite the fact that sales continue to fall, prices have risen. The MLS National Home Price Index rose 0.6% from June and 22.2% more than last year.
Ontario leads in annualized price increases of about 30 percent, driven mainly by price increases outside of Greater Toronto (GTA).
“The slowdown we’ve seen in home sales over the past few months was not a surprise given that the level of activity we saw back in March was volatile,” said Sean Cathcart, senior economist at CREA.
“But we are not returning to normal, we are only returning to where we were before COVID, which was far from normal. The problem of high demand for housing against the background of low supply has not gone anywhere – it is, perhaps, worse. “
Lack of inventory
Apart from historically low mortgage rates, prices remain high due to the lack of inventory for sale.
Newly listed homes fell 8.8% in July compared to June, with GTA, Montreal, Vancouver and Calgary leading the decline.
The ratio of sales to new placements in the country in July 2021 was 74 percent, compared with a long-term average of 54.7 percent. The 2.3-month inventory is half the long-term average.
BMO senior economist Robert Kavcic says markets remain strong, but the explosive growth seen earlier this year is likely to be over.
“In terms of the bigger picture, we could be close to the point where the major rebalancing of the pandemic era has exhausted itself – think about detached houses or apartments, rural or urban, cottages or travel and other expenses,” said Kavcic …
“It could be argued that some of these shifts have gone too far in the midst of the frenzy, and we may see some undoing ahead, even if many of the major changes are permanent.”
Jesse Baines is a senior reporter for Yahoo Finance Canada. Follow him on Twitter @jessysbains…