Canadian Home Sales Surge

Date Posted: February 15, 2024

In January, home sales in Canada rose for the second consecutive month, showing a 22% increase compared to the previous year. Economists credit this rise to favorable weather across the country and growing buyer confidence anticipating future rate cuts by the Bank of Canada.

According to data from the Canadian Real Estate Association (CREA), home sales in January increased by 3.7% compared to December, following a 7.9% gain in December. However, CREA noted that despite these gains, sales activity still lags approximately 9% below the 10-year average.

The provinces with the highest increases in sales were Ontario (+6.9%), British Columbia (+4.5%), and Quebec (+4.3%), while Saskatchewan experienced a decline of -4.9%.

CREA's senior economist Shaun Cathcart observed a tightening market with increased sales and renewed buyer competition, particularly in areas with the most significant sales growth. However, he also noted that prices are still declining in these areas, indicating ongoing market adjustment.

Although home prices have remained stable, they haven't shown the same strength as sales. The MLS Home Price Index (HPI) fell by 1.2% month-over-month and increased by only 0.4% year-over-year.

The average national home price, not seasonally adjusted, rose by 7.6% from January 2023 to $659,395.

Sales continued to surpass new listings, causing the sales-to-new listings ratio to rise to 58.8%, up from 50% three months ago but still below the 10-year average.

Months of inventory tightened for the second consecutive month to 3.7 months in January, down from 5.8 months in December.

Economists caution that it's premature to predict the spring market's trajectory based on the recent increase in activity. Factors such as low sales volume in January and significant seasonal adjustments affect interpretation. Moreover, rising bond yields, which influence fixed mortgage rates, could dampen housing demand in the coming months due to expectations of delayed Bank of Canada rate cuts.

Annual Price Difference Per Province