Senior Director of Canadian Economics
Canada: Housing’s Been Knocked Down, but It Got Up Again in February
March 15, 2023
- Existing homes sales rose 2.3% in February on a seasonally-adjusted basis. It also put home sales 40% below the year-ago level, when the housing market frenzy in Canada was at its peak. Rising sales were led by eye-popping advances in the Greater Vancouver Area (15.2%) and Greater Toronto Area (8.5%). Meanwhile, the average sale price of an existing home rose by 1.7% to $635K in February. Looking to the composite benchmark price, which adjusts for market composition, the purchase price of a home was down 1.1% from January 2023 and nearly 16% from a year ago. Looking to the composite benchmark price, which adjusts for market composition, the purchase price of a home was down 1.1% from January 2023 and nearly 16% from a year ago.
- Housing starts surprised well to the upside in February, jumping 13% over January to 244,000 units. While multi-unit urban starts drove the headline, rising 18%, single-detached urban starts clocked in at a still-respectable 8% in the month.
- While higher sales were broadly expected, the sharp upward move in starts was not. But it’s probably too early to bet that residential construction is at a turning point. That said, we expect sales activity to find a bottom in the middle part of this year, particularly if some of the recent decline in yields is sustained. For the Bank of Canada, this may mean keeping rates high for longer if the ‘accumulation of evidence’ suggests the economy is outperforming the Bank’s expectations.
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