A new report from RBC Economics indicates that confidence is slowly improving across Canada’s housing markets, with home sales gaining momentum as earlier economic fears begin to fade. However, the recovery has not been enough to stabilize falling prices in affordability-challenged areas where a high volume of inventory has accumulated.
According to early reports from local real estate boards for July, the MLS Home Price Index continued its decline in the Toronto and Vancouver areas, as well as other Southern Ontario and Lower Mainland markets. These are regions where active listings have reached historically high levels, and buyers are facing stretched affordability.
While the increase in resales is helping to rebalance supply and demand, it has yet to ease the downward pressure on prices. In the Toronto area, for example, home resales jumped 13% from June and 10.9% annually, but the MLS HPI still fell 5.4% from a year ago. Similarly, Vancouver’s MLS HPI was down 2.7% in July year-over-year.
In contrast, prices have remained comparatively stronger in most markets across the Prairies, Quebec, and the Atlantic regions, supported by tight supply-demand conditions. The July data reveals that home resales increased in Calgary, Edmonton, Regina, and Saskatoon, building on gains made in June. The report notes that while Calgary’s composite MLS HPI fell 3.9% from a year ago, the price adjustment is expected to be short-lived as supply and demand are considered to be largely in balance.
Overall, the report suggests that a broad market recovery is expected to get back on track across Canada as confidence builds further. While diverging price trends are likely to continue for the foreseeable future, RBC Economics analysts project that these trends could narrow later this year or next.
The rebound in sales activity is viewed as a crucial step toward rebalancing the market and eventually easing the downward pressure on prices, especially in the country’s most expensive metropolitan areas.
CMP
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