National housing sales continued to climb in May, according to the latest release from the Canadian Real Estate Association (CREA). Not only did a vast majority of markets register an increase in monthly sales, the first annual increase in nearly two years was reported.
Month-over-month, national home sales climbed by 5.1 percent in May, while actual (not seasonally adjusted) monthly sales activity was 1.4 percent higher than May 2022.
An increase in sales activity was reported by 70 percent of local markets, including the Greater Toronto Area (GTA), Montreal, Greater Vancouver, Calgary, Edmonton and Ottawa.
“The rebound has been evident for a number of months at this point, but May really drove the point home with year-over-year comparisons for both national sales activity and national average home price back in positive territory,” said Larry Cerqua, chair of CREA.
Home prices continue to climb, with the MLS® Home Price Index (HPI) rising by 2.1 percent from the month prior. This is a sizeable monthly increase, but still 8.6 percent short of the levels seen in May 2022.
Meanwhile, the actual (not seasonally adjusted) national average sale price increased by 3.2 percent, year-over-year, the first annual increase seen in the last twelve months.
Substantial activity in the GTA and BC Lower Mainland skewed the national average price upwards, with these markets contributing disproportionately, compared to the rest of the country.
While sales activity continues to ride a wave of momentum with buyers actively engaged in the market, supply remains low, as sellers grapple with market conditions and a rising interest rate environment.
“A rebound in housing activity this year was never really in doubt because we knew the demand was there – the only question was around timing and that was answered this spring,” said Shaun Cathcart, CREA’s Senior Economist.
“The 2023 housing puzzle piece that was less obvious was the reluctance of existing owners to take advantage of a slower market to make a move because they don’t want to mess with the ultra-low fixed rates they locked in during the COVID-19 pandemic,” Cathcart says.
New listings rose by 6.8 percent in May on a monthly basis, but the sales-to-new listings ratio was 67.9 percent, relatively flat from 69 percent in April, reflective of the continued lag in supply.
There were 3.1 months of inventory in May, falling slightly from 3.3 months in April, well below the long-term average for this measure, which is approximately five months.
The number of new listings is increasing but are still at historically low levels. The recent rate hike, and renewed concerns over additional rate increases in the future may temper that momentum, putting additional pressure on supply.
“Without existing owners supplying the market with new listings, this housing demand rebound may play out more acutely than might have been expected on the price side this year,” says Cathcart.
