July saw the Canadian housing market break sales records as transactions across the country rose over 30 percent compared to the previous year.
The 62,355 sales total recorded in July was the highest for any single month in the Canadian Real Estate Association’s (CREA) records, which go back over 40 years.
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Many individual large markets across the country saw sales jumps in the 40 percent to 50 percent range, while on a national level, sales rose 26 percent compared to June figures.
In a note titled “Record highs during a pandemic? Must be Canadian housing,” TD Senior Economist Brian DePratto called the sales increase seen in July “astonishing.”
As other sectors of the economy continue to struggle with the immense challenges brought on by the COVID-19 pandemic, it appears that, at least for now, the Canadian housing market has scored the elusive “V-shaped” recovery so many industries had hoped for.
“It looks like we got at least one “V” recovery after all,” wrote DePratto.
“In just three short months, Canadian resale activity and average prices have not just popped back to above pre-pandemic levels, but to new record highs. With many markets extremely tight and the pandemic making a mockery of typical sales patterns, August is already shaping up to be another hot month.”
DePratto noted that sales climbed so high in July that there was no chance for listings to keep up. This sent the widely monitored national sales-to-new listings ratio — a key indicator of market balance — surging into seller’s market territory while the average national sale price rose 14.3 percent year-over-year.
Anticipating that many would be left wondering about this historic performance during a time of high unemployment and economic uncertainty, DePratto offered a number of explanations for the surprisingly strong July activity levels.
Pent-up demand from the spring market and the fact that lower wage earners were more affected by job losses were among the economist’s top reasons for the market’s strength. DePratto also pointed to home sellers returning quickly to the market to at least partially satisfy demand from buyers who were able to take advantage of ultra-low interest rates brought on by the pandemic.
Looking ahead, DePratto said it will be important to monitor the resiliency of home prices as economic support programs that were introduced in the pandemic’s earlier days change or wind down.