Is the market about to heat up?
December saw Canadian home sales increase on a month-over-month basis for the first time since last June as expectations of impending interest rate cuts began to strengthen.
New Canadian Real Estate Association (CREA) data showed that home sales across the country rose unexpectedly by 8.7% last month, with supply also tightening as the number of newly listed properties fell by 5.1% compared with November.
CREA said the strong activity to close out the year meant December’s market performance matched some of 2023’s busiest months during the spring and summer.
Still, annual home sales came in significantly lower than in 2022, plunging by 11.1% to 443,511 units in what CREA described as technically the lowest annual national sales level since 2008.
“While December did offer up a bit of a surprise in sales numbers to cap the year, the real test of the markets’ resilience will be in the spring," says Larry Cerqua, CREA Chair 👉 https://t.co/ABP2i2Kfbk #CREAstats pic.twitter.com/lRGSsKieaq
— CREA | ACI (@CREA_ACI) January 15, 2024
Larry Cerqua, CREA’s chair, said the “real test” of the market’s strength would arrive in the spring, while senior economist Shaun Cathcart said it was unlikely the December figures would herald the beginning of a national housing market recovery.
The bounce to end the year, Cathcart said, “was more likely just some of the sellers and buyers that were holding onto unrealistic pricing expectations last fall finally coming together to get deals done before the end of the year.”
CREA continues to forecast a resurgence in housing demand this year – but Cathcart said the market must wait “a few more months” before it becomes clear what that actually looks like.
The national sales-to-new-listings ratio stood at 57.8% in December compared with 50.5% the previous month, while the number of months of inventory nationally fell from 4.2 months at the end of November to 3.8 months at the end of December.
