Canada home sales were up in December

The latest report by the Canadian Real Estate Association (CREA) shows that national home sales were up by 1.3% in December compared to November, while the annual increase reached 39%.

According to the CREA, the MLS Home Price Index went down by 1.6% on a monthly basis. At the same time, the non-seasonally adjusted national average sale price fell by 12% on a year-over-year basis.

The number of new listings kept going down, with a 6.4% decline from November. The largest decreases were reported in British Columbia and Quebec, and Ottawa and Edmonton saw the largest hikes.

December showed 4.2 months of inventory nationally, which is quite close to pre-pandemic levels, but still almost one month less than the long-term average.

CREA’s chair Jill Oudil also expressed a certain sign of optimism on the growing-rate environment that has been affecting the real estate market during the previous year.

“The market’s adjustment to higher rates may be mostly over,” – she noted. “That could start bringing buyers back to the market this spring.”

When it comes to the 2023 market, CREA’s senior economist Shaun Cathcart believes its path will strongly depend on how close the high inflation and growing interest rates get to a more normal level.

“Demand for real estate keeps going up and supply is still the largest issue,” – he said. “Whether that hits in the rental market this year or returns into the ownership space is a matter of how quickly the central bank can get inflation back under control and begins to reduce borrowing costs.”

CREA expects home sales to go down by 0.5% from a year ago in 2023, while the average price may fall by 5.9% on a year-over-year basis to $662,103.

It will probably be followed by a recovery in 2024, CREA says, when national home sales rise by 10.2% and the national average home price goes up by 3.5%.