The price of the average Canadian home that sold in June was $679,000, an increase of 25 percent in the past year. While sales have risen sharply, too, both figures were lower last month than in the month before.
Statistics released on Thursday by the Canadian Real Estate Association (CREA) show national home sales set another all-time record in March 2021 as increased supply became available.
Home sales recorded over Canadian MLS® Systems climbed 5.2% between February and March 2021 to set another new all-time record. In the face of continuing strong demand, the increase in sales was likely the result of an increase in new supply. (Chart A)
The month-over-month increase in national sales activity from February to March was broad-based and generally in line with locations where more new listings became available. Sales gains were largest in March in Greater Vancouver, Calgary, Edmonton, Hamilton-Burlington, and Ottawa.
Actual (not seasonally adjusted) sales activity posted a 76.2% y-o-y gain in March, though year-over-year comparisons will be extremely stretched this spring because of last year’s initial lockdown period.
In line with heightened activity since last summer, sales set a new record for the month of March by a considerable margin (almost 22,000 transactions). In fact, the 76,259 residential properties that traded hands via Canadian MLS® Systems in March 2021 marked the highest level of activity of any month in history, nearly 14,000 more sales than the previous record set last July.
“Seeing how many homes were bought and sold in March 2021, one could be forgiven for thinking the market just continues to strengthen, and maybe to some extent it is,” stated Cliff Stevenson, Chair of CREA. “The real issue is not strength in housing markets but imbalance. That demand has been around for months, but with the shortages in supply we have across so much of Canada, a lot of that demand has been pressuring prices. So the big rebound in new supply to start the spring market is the relief valve we need the most to get that demand playing out more on the sales side of things and less on the price side. That said, it will take a lot more than one month of record new listings, but it looks like we may finally be rounding the corner on these extremely unbalanced housing market conditions. It’s great news for frustrated buyers, who should consult with a local REALTOR® for the best information and guidance about buying or selling a home this year,” continued Stevenson.
“We spent a lot of time over the last year talking about pent-up demand, but I think now is a good time to talk about pent-up supply, which may be the answer to the question everyone is asking right now,” said Shaun Cathcart, CREA’s Senior Economist. “2020 was the year that home became everything, so in hindsight, it’s not that surprising that so many people who did not have one in which to ride out the pandemic really wanted one, while so many of those who did have a home to hunker down in were not inclined to give it up. It stands to reason then, that as the uncertainty caused and the danger posed by COVID wind down, some owners who would not sell during a global pandemic will emerge with properties for sale, while at the same time some of the urgency on the demand side could dissipate. We’ll only know in the fullness of time, but March certainly did nothing to disprove the idea. That said, the third wave of COVID-19 could throw a wrench into the works of a potential supply recovery this spring.”
The number of newly listed homes climbed a further 7.5% to set a new record in March. Together with February’s big rebound, the new supply is up more than 25% in the last two months.
With the rebound in new supply outpacing recent gains in sales, the national sales-to-new listings ratio eased back to 80.5% in March compared to a peak level of 90.9% set in January. The long-term average for the national sales-to-new listings ratio is 54.4%, so it is currently still very high historically. The good news is it appears to finally be moving in the right direction.
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