The housing market in Canada continued to slow down from a frantic pace in May.
Canadian Real Estate Association (CREA) reports home sales in the country fell by 7.4% compared with the previous month after falling 11% in April. The fall was widespread, with sales dropping 80% of the markets.
But this does not mean that the bottom has suddenly dropped on the hot real estate market of the country. May was still the strongest month in history. Compared to May 2020, which was the worst month of May since the late 90s, this is an increase of 103.6 percent.
Prices also remain higher, climbing 24.4% on the MLS House Price Index. It is up 1% from the previous month, but CREA says the monthly growth rate is slowing.
The biggest price increases from last year were in Ontario, and CREA says this is where prices slowed the most in just a month.
“While housing markets across Canada remain very active, we now have two months of moderate activity in terms of supply, demand and prices,” said CREA Chairman Cliff Stevenson.
“There is more and more anecdotal evidence of supply fatigue and frustration among shoppers, and the urgency to block the COVID experience is expected to disappear at this point as well, given where we are with the pandemic.”
What it will take to bring home prices down
The country’s sales to new ads ratio was 75.4% in May, still well above the long-term average of 54.6%, albeit well below the 90.7% in January.
BMO senior economist Robert Kavcic says it will take more than just a slowdown in sales to bring prices down.
“Home sales are down from extreme levels seen in recent months, but current activity is still high and contributes to excessive price increases,” Kavcic said in a note.
“We believe that sales activity will gradually decline in the coming year, but higher interest rates will be required to significantly ease the market situation.”
Jesse Baines is a senior reporter for Yahoo Finance Canada. Follow him on Twitter @jessysbains…