Home sales in Canada were lower in March, but prices rose 11.2% from the same month a year earlier, the Canadian Real Estate Association (CREA) said on Tuesday.
Sales were down 16.3% from a year ago when they hit a record high, ACI said. On a monthly basis, seasonally adjusted residential property sales retreated 5.4% in March.
According to economist Rishi Sondhi of TD Bank, part of the March decline likely reflected, to some extent, buyer fatigue after several months of robust activity, as buyers moved up their purchases ahead of the rate hike. of interest.
The Bank of Canada raised its target rate by a quarter of a percentage point in early March and by half a percentage point last week. These decisions pushed up banks’ prime rates, as they use the central bank’s policy rate as a benchmark when setting variable mortgage rates.
Rates on five-year fixed-rate mortgages have also risen in recent weeks, along with yields on five-year Government of Canada bonds.
“And, with the Bank of Canada poised to aggressively hike rates, home sales are expected to decline further in the future,” Sondhi wrote in a report. “This should help balance the market and weigh on house price growth. Indeed, our forecasts point to a significant slowdown in the average growth of house prices in the second half of the year. »
The decline in the number of transactions came as the number of new listings for sale fell 5.5% on a monthly basis in March. The national price of homes sold in March hit $796,068, down from $715,696 in the same month in 2021. Excluding the greater Vancouver and Toronto areas, two of the hottest and hottest real estate markets pricey, the national average price last month was instead around $633,000.
Royal LePage revises its forecast upwards
In a separate study released Tuesday, real estate agency Royal LePage reported that aggregate property prices nationwide rose 25.1% year-over-year in the first quarter, to $856,900. This is the highest gain ever recorded for a first quarter since the company has studied these prices.
Royal LePage chief executive Phil Soper said the real estate company expects a strong first half of 2022, with real estate markets moderating thereafter.
“The first quarter of the year was so strong, however, that we had to raise our guidance for 2022,” Soper said in a statement. “What’s more, house prices will continue to rise in the months to come, as a result of the continuing imbalance between insufficient supply and strong demand. »
Royal LePage now forecasts that the aggregate price of a property in Canada will rise 15% in the fourth quarter, compared to the same quarter in 2021. In its previous forecast, the growth indicated was 10.5%.
Decline in housing starts
Separately, the Canada Mortgage and Housing Corporation (CMHC) reported on Tuesday that the seasonally adjusted and annualized number of housing starts rose to 246,243 units in March, from 250,246 in February.
In urban centres, housing starts fell 2% to 220,708 in March. In the segment of apartments, condominiums and other types of multi-unit housing, housing starts fell 5% to 154,876, while those of single-detached houses rose 8% to 65 832.
Rural housing starts were estimated at a seasonally adjusted annual rate of 25,535.
The six-month moving average for the number of seasonally adjusted and annualized housing starts was 252,497 in March, down from 253,296 in February.