Canadian housing market activity remained subdued in June, with little response to the first Bank of Canada rate cut of this cycle. Simply put, with fixed mortgage rates already well below variable, and very few borrowers using variable-rate product, these early rate cuts aren't having a big impact. At the same time, investors remain absent given flat or falling prices and poor cash flow dynamics, which has scrubbed out a previously-large cohort of buyers.
Overall sales rose 3.7% on seasonally-adjusted basis in June, but were still 9.4% below year-ago levels and a similar amount below the 10-year average. Meantime, new listings continue to rise, up 1.5% in June and 2.9% from a year ago with increases in five of the past six months. The sales-to-new listings ratio improved slightly in the month, and remains very well-balanced at 53.9%.
In some markets, the outstanding inventory of homes for sale has rarely been higher and, while location/ type matter a lot, it's fair to say that a gradual building of resale inventory continues. The months’ supply of homes for sale sat at 4.2 in June, or just off the highest in four years
Prices at the national level remain stagnant. The benchmark price inched up 0.1% in June, but was still down 3.4% from year-ago levels. And, on an annualized basis, prices have gone nowhere over the latest 3- and 6-month periods. But, there are clear disparities in market conditions across the country and by segment.
Calgary is still the strongest larger market in Canada, with the sales-to-new listings ratio sitting at 79%, while prices continue to push record highs, up 8.7% y/y. That strength, which was highly localized, has now spread wider across the Prairie region with sellers' markets taking shape in Edmonton, Regina and Winnipeg. Prices are now up from a year ago in each of those cities. And, similarly-firm conditions persist in much of Quebec and Atlantic Canada. In most cases, this is a reflection of where Canadians can find affordability and, as a result, where they are moving.
On the other end of that trade lies Vancouver and Toronto—that is, unaffordable markets that are witnessing people leave. Vancouver sales were down 13% y/y and prices are flat. Toronto sales have also slipped 13% in the past year, leaving prices down 4.9% and the overall market balance tilting in favour of buyers. There, the market has become almost awash in resale condo supply, where prices have fallen 4.2% annualized over the latest six months, while prices for scarcer single-detached homes have risen 2.5%. This should be the norm for some time yet.
All told, the resale housing market was subdued across much of the country in June, with little major response to the initial rate cut of this cycle. For the Bank of Canada, this will be considered good news as the market is not standing in the way of further easing at this point. For homebuyers, the path back to 'affordability' remains slow on a national scale, and families continue to move to find it. For investors, especially in the GTA, it's still a very tough market