The Canadian Real Estate Association says the country’s housing market continued to cool last month with home sales dropping by nearly 22 per cent since last year and almost nine per cent between April and May.
On a year-over-year and non-seasonally-adjusted basis, sales amounted to 53,720, a fall from 68,598 in May 2021.
Seasonally-adjusted sales for the month totaled 42,649, down from 46,644 in April.
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“Ultimately this has been expected and forecast for some time – a slowdown to more normal levels of sales activity and a flattening out of prices,” said Shaun Cathcart, CREA’s senior economist, in a release.
“What is surprising is how fast we got here.”
The moderation came after the country rang in the new year with soaring prices and a torrid pace of sales that prompted provinces and the federal government to eye a suite of cooling measures.
Ontario, for example, increased a tax on non-resident homebuyers from 15 to 20 per cent in March and broadened the policy to the entire province instead of just the Greater Golden Horseshoe.
But even more impactful than the patchwork of policies has been rising interest and mortgage rates, which economists attribute much of the cooling to.
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Realtors now notice prospective buyers negotiating more than they were able to in previous months, while sellers are still coming to terms with how the market has shifted and some are even holding back on listing their homes.
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The association says the sales decreases were steeper in April, but May’s figures still resembled the levels of activity seen in the second half of 2019, before the COVID-19 pandemic began.
May sales were down in three-quarters of all local markets, led by regions like the Lower Mainland in British Columbia, Calgary, Edmonton, the Greater Toronto Area and Ottawa.
With rising mortgage rates weighing on sales, the association now expects 568,288 properties to change hands this year, a 14.7 per cent decline from the 2021 record but still the second-highest annual figure ever.
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It predicted sales will edge back a further 2.8 per cent to 552,403 homes in 2023.
However, there will be little relief in prices.
CREA forecasts the national average home price will rise by 10.8 per cent on an annual basis to 762,386 in 2022 and expects the largest gains to come from the Maritime provinces, Ontario and Quebec. Then, the national average home will rise by another 3.1 per cent to 786,282 in 2023.
The average seasonally-adjusted price in May sat at $ 700,438, down nearly four per cent from $ 728,171 in April.
The average non-seasonally-adjusted price was $ 711,316, up roughly three per cent from 687,595 the year before.
New listings climbed 4.5 per cent on a seasonally-adjusted basis from 70,971 in April to 74,145 in May, as Montreal saw an increase in new supply.
On a non-seasonally-adjusted basis, new listings totaled 100,643 last month, up more than six per cent from 94,704 in May 2021.
© 2022 The Canadian Press