Canadian Home Sales Slowed Modestly in August

Data released today (9-15-22) by the Canadian Real Estate Association (CREA) reveals that national home sales in Canada slowed modestly in the August. According to CREA, home sales recorded over the Canadian MLS® System decreased 1% between July and August. This marks the sixth consecutive month-over-month decline in housing; however, it was the smallest of the six, as the national sales slowdown triggered by rising interest rates continues to moderate.

The actual (non-seasonally adjusted) number of transactions in August 2022 came in 24.7% below August of 2021. CREA notes that while the August decline was sizeable, it was smaller than the 29.4% year-over-year decline recorded in July 2022.

On a month-over-month basis, the number of newly listed homes declined 5.4% in August. The decline built on the 5.9% decrease noted in July. At the end of August, inventory on a national basis was at a 3.5-month level, which is up slightly from the 3.4 months reported in the July. However, it remains well below the long-term average of 5.0 months.

The Aggregate Composite MLS® Home Price Index (HPI) edged down 1.6% month-over-month in August—not a small decline historically, but smaller than the dips in June and July of this year.

Adding additional background, Shaun Cathcart, CREA’s Senior Economist, said:

“The stress test was unpopular with some when it was introduced. But as we have all now watched the Bank of Canada raise its key interest rate by 300 basis points in the space of five months, it’s clear many Canadians were protected by it. But should there not be a flipside to the coin? The overnight rate is now officially above the Bank of Canada’s ‘neutral’ range and not expected to go too much higher. This is not about ‘looser’ or ‘tighter,’ it is about what is appropriate given where rates are and where they are likely to go moving forward. OSFI is likely thinking hard about what makes sense given the new realities, and how to balance the community of interests they are tasked with securing.”