The July home sales and price numbers from the Canadian Real Estate Association continue to point to an ongoing correction in Canada’s housing market.
Sales were down 5.3% from June and were down more than 29% from a year earlier. The national average home price fell 5% year-over-year, but that was heavily influenced by declines that were confined to British Columbia and Ontario.
CREA’s preferred measure, the Aggregate Composite MLS Home Price Index (HPI), edged down 1.7% from June to July, but remained almost 11% higher than a year ago. The Association believes the correction will be relatively short lived. It expects to see both buyers and sellers return to the market once inflation and interest rates stabilize.
In a recent report economists Robert Hogue, Carrie Freestone and Naomi Powell also call for a relatively short correction. They suggest immigration and shrinking household size will support the housing market.
“We expect the number of Canadian households to rise by 730,000 by 2024 compared to 2021, adding 240,000 new households annually. Immigration is key … targets are set to bring in a record 1.3 million new permanent residents, adding 555,000 new households,” they write.
“Even a relatively small decline in average household size has a big impact on the number of new housing units required. Over the five years leading up to 2021, average household size declined by 0.02 people … enough to raise the total number of households by 140,000. This trend will be responsible for just under 90,000 of the 730,000 new households created by 2024—and will provide a significant boost in housing demand,” the report says.