Canadian housing market sluggish in March, CREA says
The Canadian Real Estate Association is expecting the national housing market to “pick up on some level this year,” despite another month of sluggish activity in March.
CREA monthly data show the benchmark home price dipped by 0.3 per cent to $718,400 for the month, while sales inched up 0.5 per cent from February.
Despite the uptick, sales remain approximately 10 per cent below their 10-year average.
Meanwhile, newly listed properties declined by 1.6 per cent, but rebounded toward the end of the month that followed through into April.
“Weekly tracking showed a bounce in new supply around the second week of March, which led to a burst of sales in the last week of the month, and a jump in listings in the first week of April,” CREA said in its March market report.
CREA senior economist Shaun Cathcart said the impact of the increased number of properties for sale on buyer behaviour is uncertain, and that the full picture will only become clear once the April data are available.
However, he predicts that the market could see a mix of people staying on the sidelines due to high interest rates and others returning to the market due to anticipated rate cuts.
Other industry observers are convinced that interest rates will exert a significant influence on the market, particularly in light of recent developments in the bond market.
On Wednesday, an inflation report from the U.S. Bureau of Labor Statistics revealed a sharper-than-expected increase in consumer prices, impacting bond yields in both the U.S. and Canada.
“Based on what’s been happening in the bond market over the last few weeks, don’t be surprised if fixed rates increase further in April,” real estate financial expert Clay Jarvis said in an email. “Depending on how high they go, it might even be enough to cool activity in our more affordable cities.”
He noted that as fixed interest rates inched higher in March, it comes as no surprise to see a decline in sales within Canada’s priciest real estate markets.
According to CREA, Toronto and Vancouver saw sales drop by 4.9 per cent and 4.8 per cent year-overyear in March, while Montreal, Calgary, Edmonton and Halifax experienced increases of 14.2 per cent, 10.3 per cent, 34 per cent and 21.4 per cent, respectively.
Despite lingering hopes for a real estate market rebound this year, Bank of Montreal economist Robert Kavcic also believes that developments in the bond market will curtail any potential relief.
“The amount of easing might be limited by much tougher U.S. inflation trends,” Kavcic said. “The market is currently pricing in just over two rate cuts in 2024, which would be far short of the relief many were hoping for coming into 2024.”