Mar 15, 2023
Canadian home prices post their smallest drop in nearly a year
Canada home prices down nearly 13% from Jan. 2022: CREA
The pressure on Canadian home prices eased up in February after the central bank signaled it was ready to pause its campaign of higher interest rates.
The country’s benchmark home price dropped 1.1 per cent in February from the month before to $704,300 (US$512,060), the smallest month-to-month decline since last March, according to seasonally adjusted data released Wednesday by the Canadian Real Estate Association.
The past year’s surge in borrowing costs spurred one of the fastest declines in Canadian homes values on record. But now the Bank of Canada has moved to the sidelines, keeping interest rates unchanged this month, and the market appears to be stabilizing.
“There are signs that sales activity and prices may be close to a nadir,” Doug Porter, chief economist at Bank of Montreal, said in a report to investors. “The reset in interest rates over the past year has blown off some of the pandemic era froth in Canada’s housing market.”
Prices found some support in February as home sales started to tick back up, with transactions climbing 2.3 per cent from a month earlier.
The number of properties hitting the market plunged 7.9 per cent, however, the steepest decline since May 2021, according to the CREA data. At 57,500 units, February saw the lowest number of new listings in Canada since 2004, barring the first three months of the country’s COVID-19 pandemic lockdowns in 2020.
This mismatch between sales and new listings made February the tightest Canada’s housing market has been since last April, just after the central bank began raising borrowing costs.
But now with rates on hold and demand starting to perk up, the main question for the housing market will be whether more supply comes online as the traditional spring selling season ramps up.
“February’s data contained the potential of a more robust market to come,” Jill Oudil, the real estate association’s chair, said in a press release accompanying the data. “While we’re not seeing it in the sales or listings data just yet, I would expect homeowners are getting properties ready for the market and prospective buyers are getting mortgage pre-approvals.”