National home sales in Canada edged down 0.6 per cent month-over-month last month, with actual monthly activity coming in 5.9 per cent below May 2023 levels.
On the other hand, sales activity remained below the 10-year average, as the number of newly listed properties increased by 0.5 per cent month-over-month in May.
More homes for sale across Canada thanks to new listings and slow sales
More new listings amid slower sales have led to an increasing number of homes for sale across most Canadian markets. About 175,000 properties were listed for sale nationally at the end of May 2024, representing a 28.4 per cent increase from a year earlier, but remaining below historical averages. There were 4.4 months of inventory nationally, up from 4.2 months in April, the highest level for this measure since the fall of 2019.
The MLS Home Price Index dipped 0.2 per cent month-over-month in May. The non-seasonally adjusted national average sale price was down 4.0 per cent year-over-year at $699,117.
Largely flat prices with a few anomalies
Home prices are largely flat across most markets, except for steady increases in Calgary, Edmonton and Saskatoon.
The national sales-to-new listings ratio eased to 52.8 per cent, still within the 45-65 per cent range for balanced market conditions. The non-seasonally adjusted national average sale price was down 4.0 per cent year-over-year.
Lower interest rates & the psychological effect on homebuyers
The Bank of Canada’s recent 25 basis point rate cut is expected to have a significant psychological effect on potential homebuyers who have been sitting on the sidelines, bringing pent-up demand back into the market.
However, the pace and extent of further rate cuts will determine the impact on the housing market.
Canadian housing activity saw another quiet month in May, with sales edging slightly lower and new listings moving only a little higher. We’ll see what happens in the coming months, when the Bank of Canada’s rate cut is expected to create a revival.
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