Canadian home sales for May have dropped slightly, but new listings are increasing. Is the market about to recover?

Last month, national home sales in Canada fell 0.6 per cent from the previous month. The actual monthly activity was 5.9 per cent lower than May 2023 levels.

In May, however, the sales activity was below the 10-year median, despite the fact that the number of newly-listed properties increased by 0.5 percent month-overmonth.

New listings and slow sales have led to more homes being listed for sale in Canada

In most Canadian markets, the number of homes on the market has increased due to more new listings and slower sales. About At the end of May, 2024, 175,000 homes were listed for national sale, a 28.4 percent increase from a previous year, but still below historical norms. There were 4.4 month’s worth of inventory in the United States, up from April’s 4.2 months. This was the highest level of this measure since fall 2019.

The MLS Home Price Index fell 0.2 percent month-over-month during May. The non-seasonally-adjusted national average sale price fell 4.0 per cent over the past year to $699,117.

Prices are largely flat with a few anomalies

The average home price is largely flat in most markets, with the exception of Calgary, Edmonton, and Saskatoon, where prices have been steadily increasing.

The national ratio of sales to new listings fell to 52,8%. This is still within the range of 45-65 percent for a balanced market. The non-seasonally-adjusted national average sale price fell 4.0 per cent over the past year.

Lower interest rates & the psychological effect on homebuyers

The Bank of Canada’s recent 25 basis point rate reductionThis is expected to have an important psychological effect on potential buyers who have been on the sidelines. It will bring pent-up market demand back.

The impact of future rate cuts on the housing market will depend on the pace and extent at which they are implemented.

Canadian housing activity was quiet in May. Sales were slightly down and new listings only slightly up. We’ll see what happens in the coming months, when the Bank of Canada’s rate cut is expected to create a revival.