No Spring in its Step
Canada’s housing market has yet to come out of winter hibernation, with sales subdued and prices still drifting lower at the national level. Market conditions continue to vary significantly by region, but the big picture is that national housing momentum has yet to pick up. We continue to wait for the spring season for a clearer view, but still expect soft activity for most of the year.
Existing home sales were effectively flat in seasonally-adjusted terms in March (-0.1%), and were still down 2.3% from year-ago levels. The level of sales activity is still running very low, or roughly 17% below the 10-year average, with raw March activity the weakest for that month since the 2009 recession. New listings also dipped 0.2% in the month, and were down 4.9% from a year ago.
That left the sales-to-new listings ratio little changed at 47.8%, reflecting still-balanced overall national conditions. The coming months will be a good test of market balance, with some pent-up demand meeting pent-up listings that didn't sell since the fall. How those two sides interact will determine if the market can tighten up through the rest of the year. Suffice it to say that when you're on the floor, the next direction is (eventually) higher.
The national benchmark price slipped again in March, and was down 4.7% y/y from a year ago. Short-term momentum hasn't improved much either, with the 3-month annualized decline running at 7%. After the initial deep correction, prices are now in the process of slowly bleeding until affordability gets restored.
The regional variation in market conditions remains stark. At the strong end, Quebec and Atlantic Canada are seeing firmly balanced or sellers' markets, with house price momentum still running positive. As two examples, while national home prices are falling, Quebec City and Moncton are posting double-digit gains from a year ago.
Alberta markets have pivoted from strength to softness. Sales-to-new listings ratios have slipped below 60% in Calgary and Edmonton, which is still balanced territory, but well down from recent readings. Sales in both markets are down by double-digits from a year ago, and prices are down roughly 3%.
Southern Ontario is still the weak spot, especially in the new condo space. New condo sales have all but dried up and investors are absent. The removal of HST on new homes (for all buyers) in Ontario took effect April 1st, and it remains to be seen if the move will have a material impact on demand, when resale prices are trading lower. It is, however, a lifeline to homebuilders. As of March, condo prices across the province were down 8.8% y/y, with some exurban GTA markets under more pressure. Vancouver and some other markets across B.C. remain weak as well, with elevated inventories and poor sales activity still dragging down prices.