TD Economics weighs in on the factors that will influence the rate of new listings
Canada’s housing market is likely to see a considerable decline in new listings during the first quarter before recovering later in the year and then slowing to a more modest pace come 2024, according to a new study by TD Economics.
“During the current downturn in housing markets, Canadian new listings have dropped 19% on a peak-to-trough basis, with broad-based declines across provinces,” TD said in its recent analysis.
This supply decline has prevented home prices from dropping even further, averting a potential market crash.
“After some near-term weakness, our forecast anticipates new listings climbing through much of 2023 and in 2024,” TD said. “However, rising demand should keep markets balanced and underpin positive growth in home prices, particularly in the second half.”
TD is anticipating the number of new listings will see a 7% gain over the second to the fourth quarters of 2023, after which they are likely to decelerate to a more modest 2% next year.
“Combining our current view on supply with our sales forecast yields a Canadian sales-to-new-listings ratio (a key measure of market balance) that steadily climbs but remains in ‘balanced’ territory through this year and much of next,” TD said. “This supports our call for positive price growth to resume more forcefully in the second half of this year.”
The overall picture will be that of an “orderly” increase in resale supply.
“We assume that the economy essentially stalls over the next two years, while the national unemployment rate rises by around 1.5% to 6.5%,” TD said. “This would represent about half of the increase in the unemployment rate suffered during an average historical recession in Canada, not to mention a peak level that would remain relatively low. Thus, homeowners should face less risk of job loss, limiting the potential for forced selling.”
