Some buyers have had enough of the relentless pace of Canada’s housing market and this frustration is showing up in the market activity data published each month by the Canadian Real Estate Association (CREA).
The latest figures released this week by CREA showed national home sales down more than seven percent on a monthly basis in May after dropping 11 percent in April. March now appears to be the indisputable peak of the ongoing housing boom that began to take off last summer.
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With demand still outpacing supply by a wide margin and national home prices up nearly 40 percent on an annual basis last month, CREA Chair Cliff Stevenson says anecdotal evidence continues to mount that buyers are frustrated and experiencing “offer fatigue” in the face of fierce competition.
He went on to say that the urge to purchase a new home as a space to “ride out COVID” has likely declined among buyers as the pandemic continues to recede across the country, helped along by the still accelerating vaccination effort.
CREA Senior Economist Shaun Cathcart added that with Canadians seeing a light at the end of the pandemic tunnel and their lives gradually returning to normal, homebuying may not be prioritized as much as it has been over the last year.
While all these factors contribute to a cooling market, Canadians still had a huge appetite for homes in May. Although it was far from the peak level recorded in March 2021, May sales were still historically high. Months of inventory — a key measure of market balance — came in above its record-low measure observed in March, but at 2.1 months was far below the long-term average of five months.
On the pricing front, the MLS Home Price Index was up a record 24.4 percent annually, while the national average home price was $688,000 in May, up 38.4 percent from a year ago. CREA noted that the annual increase to the average price is distorted by the pandemic lockdown-inspired tumult that gripped the market last year.