Has Canada’s frenzied home sales activity finally hit a speed bump?

New data from the Canadian Real Estate Association showed that national housing activity moderated in April compared to the record-high readings of March.

Home sales nationwide fell by 12.5% month-over-month in April, while the number of new listings saw a 5.4% decline during the same timeframe.

Monthly declines in sales activity were observed in “close to 85% of all local markets, including virtually all of BC and Ontario,” CREA said in its report. This is despite actual (not seasonally adjusted) sales activity surging by 256% annually in April.

Together, these trends pushed Canada’s MLS Home Price Index by 2.4% monthly and 23.1% annually in April. The actual (not seasonally adjusted) national average sales price also had a 41.9% year-over-year upswing.

“While housing markets across Canada remain very active, there is growing evidence that some of the extreme imbalances of the last year are beginning to unwind, which is what everyone wants to see happen,” said Cliff Stevenson, chair of CREA.

Stevenson added that the March-April slowdown was largely due to highly contagious COVID-19 variants impelling a spike in cases, which forced many cities to enact lockdowns.

“2021 may be another year where some of the spring market gets pushed into the summer by COVID-19,” Stevenson said.

Shaun Cathcart, senior economist at CREA, warned against looking at the April numbers as an indication of a weakening in the market.

“The year-over-year is a comparison to the worst numbers ever published in April of last year, while the month-over-month relationship is to the strongest numbers ever published in March 2021,” Cathcart explained. “The result is that a relatively more ‘reasonable’ set of numbers in April 2021 looks both way up or way down depending on what crazy part of the last year you compare them to, but the correct interpretation of those big numbers is that the April housing numbers came in somewhere in between those extremes, which is a good thing.”

Instead, these trends should be viewed as signs that the market is finally leaning towards more balanced conditions, accompanied by a deceleration in monthly price growth.

“I believe we’ve all wanted to see the temperature turned down on this market after the last year and it looks as though that is finally happening,” Cathcart said.

MBN

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