April home sales slip from record levels, price growth slows across Canada: CREA

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Canadian home sales fell slightly in April from March’s record-breaking flurry of activity, but still accounted for the second-highest month of sales ever.

The average selling price of those homes also continued to rise, though at a slower pace. “I compare [price growth] to those rocket cars on the Bonneville Salt Flats: It’s slowing down, but it’s still doing 500 miles per hour, at least compared to history,” said Shaun Cathcart, senior economist with the Canadian Real Estate Association.

CREA’s April Home Price Index is up 2.4 per cent from March, with the seasonally adjusted national average home price hitting $723,500; that’s 23 per cent higher than April, 2020, and 56.7 per cent higher than five years ago. But it is lower than the 3-per-cent rise recorded in March, and lower still than February’s 3.3-per-cent rise.

“Remember that prices this time last year were not depressed, so this is true strength,” said economist Robert Kavcic in a research note for BMO Capital Markets. “Over the past six months, prices are up 29 per cent annualized; and over the past three months they’re up 37 per cent annualized. And, those are national figures that mask the fact that some markets (especially cottage country) are up more than 70 per cent annualized over the past three months.”

The unadjusted average sale price (where some of the more extreme prices can skew the data) was $696,000, up more than 40 per cent year-over- year, but down from $716,828 in March.

“What happened in March was there was a bunch of new listings in Toronto and Vancouver and they made up a larger share of that national average. They are expensive sales, so that jacked the national average in March and it came back down in April,” Mr. Cathcart said. If those two markets were removed from the calculation, the national average home price would fall more than $144,000.

The monthly data showed there were 74,049 home resales in April, down 2.8 per cent from March’s all-time record sales of 76,259. (Using CREA’s seasonally adjusted numbers, the fall was 12.5 per cent, with 60,967 homes sold in April, down from 69,702 in March.)

Calgary and the Montreal region were the only two major urban markets that saw more sales in April over March. It was particularly welcome news for Alberta’s largest city, which had its best April ever in terms of sales with 4,359 homes sold, or more than four times as many as the same month in 2020.

‘For all of us here it’s like, ‘Oh things are finally better. That’s been a long time coming,’ " said Ann-Marie Lurie, chief economist for the Calgary Real Estate Board. Calgary’s real estate market has struggled through recession and oil shocks since 2014. For condominium apartments, prices are still 16 per cent lower than their peaks, but for detached and row houses, the situation has improved enough that the total average price for the city in April was $447,800, up 9 per cent year-over-year and up 2 per cent in one month.

“It’s been so many years of ‘I know everybody else is improving but Calgary’s not’ ... we’ve had a lot of those discussions,” Ms. Lurie said.

Ontario’s more rural and cottage-oriented submarkets saw prices rise the fastest with year-over-year price gains above 40 per cent: In Kawartha Lakes, for example, the average home price hit $582,100, up 5 per cent from March and up 48 per cent from a year ago.

Even New Brunswick – still the most affordable province to buy a home – saw prices in the greater Moncton area rise 2.3 per cent from March to hit $249,500; up 31 per cent year-over-year.

Canada Mortgage and Housing Corporation data released Monday showed new housing starts fell 19 per cent in April to 268,000 units from 334,800 in March, numbers TD Bank Group economist Rishi Sondhi still called “rock solid” in a research note. “The backdrop for homebuilding remains favourable (soaring lumber prices and slow population growth notwithstanding), as housing demand is strong and prices are high,” he wrote.

Atlantic Canada is also seeing strong growth in new housing starts, with 10,300 units, up from 9,000 in March. Those numbers are driven by New Brunswick, which is now seeing average month starts above 4,000, which is almost double its 10-year average.

Mr. Cathcart’s long-term diagnosis is that a supply drought that has seen a downward trend in the number of Canadian homes for sale may be finally ending, which could lead to more markets in “balance” where demand no longer so outstrips supply that sellers set their prices.

According to Mr. Cathcart, the 10-year average for transactions is about 500,000 a year, but 2021 is trending toward a new record with between 700,000 and 800,000 sales by year end.

“I would never thought it could go that high, a big reason is people are just moving more ... it’s a big shakeup,” he said. “I would think that at an uncertain time like this people wouldn’t be making those decisions, but they are pulling the trigger.”

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