Canada: Housing Market Shows Early Signs the Floor May Have Been Reached

April’s seasonally adjusted home sales increased modestly from March, in line with the expectations of economic forecasters while remaining slightly below seasonal norms.

Nationally, new listings jumped 4.1% m/m in April, marking the traditional starting point for the spring market. Inventory ticked up to 5.2 months from 5.1 months in March. The sales-to-new-listings ratio eased to 45.6%, remaining only tenuously within the 45% to 65% band considered to be balanced market territory at the national level. Toronto and Vancouver remained buyer’s markets, while the Province of Quebec and several other major centres stayed in balance (graph 1).

The average sale price was up 2.6% m/m in April, while the benchmark price declined modestly. This divergence likely reflects compositional differences between the two price measures. The Canadian Real Estate Association noted in its press release External link. that “[p]rice stabilization is an important milestone necessary for buyers to eventually start re-entering the market in larger numbers.” With sale-to-list price ratios tightening and days on markets edging lower, there are early indications that the bottom of the market may have been reached. Mortgage rates may be at their lower range for this cycle and, if prices begin to edge higher, waiting could carry some risk of higher entry costs. For prospective buyers with down payments ready, current conditions could represent a relative sweet spot in the current cycle.

Regional differences were notable, with strong seasonally adjusted sales gains in Toronto (+6.1% m/m) lifting the provincial average. Sales were also strong in Calgary and Edmonton. Despite softer sales in most other regions, price gains were seen in all provinces except Prince Edward Island (graph 2). Quebec continues to lead in home price gains among the big provinces in the post-pandemic period.

In recent years, homeownership affordability in Canada has improved modestly alongside lower prices, declining mortgage rates and rising incomes, but it remains well below pre-pandemic levels and continues to vary widely by region. Given upside risks to inflation from elevated oil prices External link. and downside risks stemming from the Canada–United States–Mexico Agreement (CUSMA) joint review, our forecast External link. continues to see the Bank of Canada on hold this year. Looking ahead, if the price floor has been reached and interest rates begin to rise as we expect next year, affordability could plateau or worsen slightly through 2027. See our recent Desjardins Affordability Index External link. for details across regions.