Real estate prices are growing in Canada, although sales are going down

Last month, housing sales in Canada were down only slightly, although real estate prices were up to a record level, as the market keeps benefitting from strong demand and low borrowing costs.

According to the Canadian Real Estate Association (CREA), the national sales fell by 1.6% from a month earlier. The benchmark prices rose by 1.2% and reached $650,100, marking the highest level on record and an 11.5% annual increase.

Record-low interest rates and strong demand for more space are leading to higher prices and sales. Although sales were slightly lower in October and November, the annual growth is close to a record.

“The level remains highly strong,” – noted Robert Kavcic, senior economist at Bank of Montreal. “Home sales are holding up better than most would have predicted.”

In spite of the historic decline, caused by the pandemic, CREA expects national sales to reach a record level of 544,413 units this year, marking an 11.1% annual gain. Next year, it’s expected to show a 7.2% increase to about 584,000 units.

The monthly sales decline reflects fewer sales in almost 60% of all local markets, especially in Toronto, Vancouver, Montreal and Ottawa. However, on an annual basis, sales rose by 32.1% last month, marking a new November record by a margin of well over 11,000 sales.

New listings were down by 1.6% in November. The national sales to new listing ratio remained unchanged at 74.8% compared to a long-term average of 54.2%.

Market conditions are still quite tight. There were 2.4 months of inventory nationwide, according to CREA, which is the lowest level on record.

“In case I needed to sum up the Canadian real estate story in 2020, I would say it’s gone from weakness caused by COVID-19 to strength despite COVID-19,” – Shaun Cathcart, senior economist at CREA, noted. “It seems like 2020 will be a record year for housing sales in Canada.”