Canada’s housing market slows down with rebalancing in major cities


Falling sales helps move some major markets closer to balanced conditions, says RBC report

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Canada’s housing market is showing signs of slowing down, a new report suggests.

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Led by “significant pullbacks” in home resale activity in May in markets like Toronto and Vancouver, the Canadian market in aggregate appears to be cooling off from its red-hot peak over the past year, stated the recent study by RBC Economics.

Home sales fell in most major markets with the exception of Calgary and Edmonton, which posted around three to four per cent growth last month compared with May last year.

In contrast, sales fell in Toronto nearly 40 per cent, year over year, only surpassed by the Fraser Valley region outside Vancouver.

Sales there fell by nearly 54 per cent.

That’s despite new listings in the region dropping by close to eight per cent.

Vancouver also saw new listings fall by nearly 11 per cent, year over year, while sales dropped close to 32 per cent. Montreal sales were also off nine per cent last month from May last year while new listings shot up nearly 14 per cent.

Based on the sales-to-new-listings ratio, Fraser Valley (44 per cent), Vancouver (51 per cent) and Toronto (44 per cent) are now considered balanced markets, the report found.

Despite falling sales, prices still gained in all markets led by Toronto and Fraser Valley at about 24 per cent and nearly 27 per cent, respectively.

“Clearly the Bank of Canada’s interest rate hikes since March… are changing the game in a big way,” stated the report’s author Robert Hogue, senior economist at RBC.

“They’re considerably raising the bar for buyers, and dragging down earlier … bullish sentiment.”

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