Canadian Housing Activity Sees Another Quiet Month in May: CREA

The month of May was another uneventful month for many Canadian housing markets with national month-over-month home sales lowering slightly and new listings moving only a little higher, according to the latest data from the Canadian Real Estate Association (CREA).

CREA notes however, that the Bank of Canada’s recent rate drop will likely lead to increased activity moving forward.

“May was another sleepy month for housing activity in Canada, although it may prove to be the last of those now that interest rates have moved lower,” said Shaun Cathcart, CREA’s senior economist. “The Bank of Canada’s June 5 rate cut may have only been 25 basis points, but the psychological effect for many who have been sitting on the sidelines was no doubt huge. The question now turns to further rate cuts – specifically, how fast, and how far?”

According to CREA, home sales activity recorded over Canadian MLS Systems dipped 0.6 per cent between April and May 2024, remaining a little below the average of the last 10 years. Home prices are also largely sliding sideways.

CREA noted that national home sales edged back 0.6 per cent month-over-month in May and that actual monthly activity came in 5.9 per cent below May 2023.

The number of newly listed properties ticked up 0.5 per cent month-over-month, according to CREA, and the MLS Home Price Index (HPI) dipped 0.2 per cent month-over-month and was down 2.4 per cent year-over-year.

According to CREA, the actual national average sale price posted a 4 per cent year-over-year decrease in May.

CREA noted that the number of newly listed homes was up in May, though only by 0.5 per cent on a month-over-month basis. The result of slower sales amid more new listings this year has been an increasing number of homes for sale across a majority Canadian housing markets.

As of the end of May 2024, there were about 175,000 properties listed for sale on all Canadian MLS Systems, according to CREA, which was up 28.4 per cent from a year earlier but still below historical averages.

“The spring housing market usually starts before all the snow has melted, somewhere around the beginning of April, but this year I believe a lot of people were waiting for the Bank of Canada to wave the green flag,” said James Mabey, chair of CREA. “That first rate cut is expected to bring some pent-up demand back into the market, and those buyers will find there are more homes to choose from right now than at any other point in almost five years.”

The national sales-to-new listings ratio eased to 52.6 per cent compared to 53.3 per cent in April, according to CREA. The long-term average for the national sales-to-new listings ratio is 55 per cent.

CREA noted that there were 4.4 months of inventory on a national basis at the end of May 2024, up from 4.2 months at the end of April. The National Composite MLS Home Price Index (HPI) dipped 0.2 per cent from April to May.

The non-seasonally adjusted National Composite MLS HPI stood 2.4 per cent below May 2023. The actual national average home price was $699,117 in May 2024, down 4 per cent from May 2023.