April Sales Falter After a Record-Breaking March in Canadian National Home Sales

According to the Canadian Real Estate Association (CREA), national home sales in Canada declined 12.5% on a month-over-month basis in April. However, March was a record setting month. Year-over-year, and not seasonally adjusted, home sales are up 256%, reflecting the gap between the best April ever in 2021 and the worst ever last year. The number of new listings of homes for sale also decline by 5.4% from March to April. The MLS® Home Price Index (HPI) rose 2.4% month-over-month and was up 23.1% year-over-year. In a statement prepared for the release of the report Shawn Cathcart said, “Home sales were up by more than 250% on a year-over-year basis in April and the average price of those sales was up 42% — the biggest gains ever — which of course means that they were both down, from last month anyway. Facetiousness aside, what we’re seeing is something known as the ‘base effect,’ which is the impact on statistics that results from the nature of the point of reference. In the case of the April 2021 housing numbers, the year-over-year is a comparison to the worst numbers ever published in April of last year, while the month-over-month relationship is to the strongest numbers ever published in March 2021. The result is that a relatively more ‘reasonable’ set of numbers in April 2021 looks both ways up or way down depending on what crazy part of the last year you compare them to, but the correct interpretation of those big numbers is that the April housing numbers came in somewhere in between those extremes, which is a good thing. While we still have a way to go, measures of market balance have finally turned a corner and monthly price growth has decelerated. I believe we’ve all wanted to see the temperature turned down on this market after the last year and it looks as though that is finally happening.”