- Existing home sales dipped 0.2% (m/m) in June, following May’s 3% gain. This was only the second monthly decline this year, with the first being a weather-induced plunge in February.
- In Vancouver, sales declined by 5%. However, this only partially reversed May’s 24% surge. Sales were mixed in other markets in B.C., increasing in Fraser Valley and Okanagan-Mainline (both up +2% m/m) and falling in Victoria (-2% m/m).
- Performances were weaker in the oil-producing provinces in June, with sales lower in Calgary (-4% m/m) and Edmonton (-0.3% m/m). However, sales were up in both markets in the second quarter overall. Sales also fell in Regina (-4% m/m) and Saskatoon (-3% m/m) during the month.
- Sales inched higher in Toronto (+0.2% m/m), the fourth straight monthly gain, as healthy fundamentals are supporting activity. Notably, single-detached sales are higher on a year-to-date basis in Toronto (through May), marking a stark contrast to the past few years. Excluding Toronto, sales were higher in Ontario, boosted by gains in London (+7% m/m) and Barrie (+5% m/m).
- Sales advanced 4% month-on-month in Quebec and were 11% higher year-over-year, as a robust economy continues to boost demand.
- Across the volatile Atlantic Provinces, sales were lower in each of New Brunswick (-6% m/m), Nova Scotia (-11% m/m), PEI (-0.6% m/m), and Newfoundland and Labrador (-23% m/m).
- National new listings edged 0.8% higher month-on-month in June, stoked by gains in Ontario (+2% m/m) and Quebec (1% m/m).
- Across Canada, markets remained balanced, with the sales-to-listings ratio at 57.1% in June. Markets remained in seller’s territory in Ontario (ratio at 60.3%, down one tick from May). Conditions remained relatively tight in Quebec (ratio at 66.6%), New Brunswick (60.5%), Nova Scotia (58.3%) and PEI (63.2%). In contrast, markets are oversupplied relative to historical norms in Alberta (51.3%), B.C. (48.8%), Saskatchewan (41.1%), Manitoba (54.6%) and Newfoundland and Labrador (31.5%).
- The average home price increased 1.3% month-on-month in May, marking the fourth straight monthly gain. On a year-over-year basis, prices were up 1.8%, driven by gains in Ontario (7%) and Quebec (4%).
- In contrast to the annual gain in average home prices, the quality-adjusted MLS home price index declined 0.3% y/y. Markets in Alberta and B.C. continue to weigh on price growth. Indeed, benchmark prices dropped on a year-over-year basis in Calgary (-4%), Edmonton (-3%), Regina (-4%) and Saskatoon (-1%). In Vancouver, prices are down 10% year-over-year – the weakest showing in a decade. In contrast, price growth remained strong in Montreal (+7% y/y) and Ottawa (+8% y/y), amid tight markets and rising demand. Prices are creeping higher in Toronto, advancing 4.0% year-on-year in June, up from 3.0% in May and the fastest price growth since 2017.
Key Implications
- Home sales took a modest breather in June, which is perhaps a mild disappointment given that mortgage rates also edged lower in the month. However, note that declines observed in some major markets followed strong gains in prior months. As such, some payback was likely in order. Moreover, the broader picture remains one of improvement, with sales 5% higher year-over-year, compared to a 6% decline during the same time in 2018.
- Moving forward, home sales will likely continue to trend higher in the second half, supported by a solid job market, strong population growth, low borrowing costs, further distance from past restrictive policies and supportive measures for first-time homebuyers.
- Today’s report caps a decent second quarter for housing activity, with sales rising 5% from their weather-impacted first quarter drop. This is yet another sign that economic growth rebounded in Q2. With a second quarter improvement in GDP growth looking like a done deal, attention shifts to third quarter growth prospects. The Bank of Canada has forecast a modest 1.5% rate for Q3, setting the bar low for growth to jump over.
