Canadian home sales have seen a marked slowdown in June
The Canadian housing market’s resurgence seen in the first half of 2023 appears to have run its course, according to Robert Hogue, assistant chief economist at Royal Bank of Canada.
“The Bank of Canada resuming its rate hike campaign and unexpectedly solid price gains in some markets this spring no doubt have dampened buyers’ enthusiasm by a few notches,” Hogue said in a new research publication.
Sales have seen a marked slowdown in June, with a mere 1.5% monthly increase in June being significantly weaker than the 16.3% growth in May.
Additionally, “a lot more supply is needed to bulk up historically-low inventories,” Hogue said. “Buyers still face a scarcity of options in the majority of markets, tilting the scale in favour of sellers. So for now home values continue to appreciate at a rapid clip.”
Data from the Canadian Real Estate Association (CREA) showed that the actual non-seasonally adjusted national average home price went up by 6.7% annually to reach $709,218 in June.
“We believe the slower pace of resales growth in June marks a shift in Canada’s market recovery,” Hogue said. “The strength of this spring’s rebound, in our view, wasn’t sustainable – especially in light of the Bank of Canada turning up the screw a couple more times, further raising the bar for potential buyers.”
Hogue is anticipating the housing market’s overall trajectory to remain generally flat for the rest of 2023, “as buyers contend with very challenging affordability conditions and an expected recession. This would set aggregate prices on a more moderate appreciation path.”
