First National Financial LP®

Residential Market Commentary - Declines continue. Is the bottom in sight?

  • First National Financial LP

Home sales in Canada resumed their downward trajectory in January, reversing a modest up-tick in December.

The latest figures from the Canadian Real Estate Association show that the number of properties changing hands last month fell 3% from December of 2022.

On a year-over-year basis sales plunged 37.1% from the near record high reported in January 2022.  Last month saw the lowest sales volume for January in 14 years (2009).

CREA did not provide the actual number of sales in its published report.

Home prices in Canada also continued their decline.  The national average home price fell 18.3% compared to a year ago.  It stands at $612,000.  That price drops to $499,000 when the busiest and most expensive markets – Toronto and Vancouver – are taken out of the calculation.

CREA’s preferred measure, the Aggregate Composite Home Price Index (HPI), is down 1.9% from December and 12.6% from a year ago.  The HPI is has fallen 15% from its peak in February 2022.

Further declines are expected in the coming months but there are signs the market correction may be nearing the bottom: new listings increased 3.3% in January, from December (although they are at a 23 year low); the spring “buying season” is approaching; and the Bank of Canada has said it would like to pause its interest rate hikes – dependent on inflation and other economic factors.