It looks like the year-long game of limbo that Canadian housing market has been playing might be coming to an end.

Home sales activity in 2022 felt like a constant “how low can you go?” moment as prospective buyers pulled back from the market in the wake of rising interest rates. But according to the latest CREA statistics, national home sales inched up by 1.3 per cent in December.

“The housing market story of 2022 was about high inflation and rising interest rates,” Shaun Cathcart, senior economist for the CREA, said. “Demand for housing continues to grow and supply remains the biggest issue across the entire spectrum. Whether that plays out in the rental market in 2023 or shifts back over into the ownership space is a matter of how quickly the Bank of Canada can get inflation under control and start turning the dial back down on borrowing costs.”

A graph showing the 10 year monthly moving average of Canada's home sales activity. A large dip can be see in 2020 and 2022, with the tail end starting to inch upwards.

Home prices also continued to drop in December, keeping with the trend that began last spring. While prices have softened almost everywhere, Ontario and parts of B.C. show the highest price declines. Calgary, Regina, Saskatoon and St. John’s are the only markets where home prices have barely come down since their peaks.

The actual (not seasonally adjusted) national average home price was $626,318 in December – down 12 per cent from the same time last year. Excluding Greater Vancouver and Toronto – Canada’s most expensive markets – takes almost $118,000 from the national average price.

The number of newly listed homes dropped 6.4% on a month-over-month basis in December, with British Columbia and Quebec leading the drop. On a national basis, there were 4.2 months of inventory by the end of the year – nearly on par with the months leading up to the COVID-19 lockdowns.

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