Canada’s housing market slowed in April, but that doesn’t mean home buyers are suddenly finding bargains.
The Canadian Real Estate Association (CREA) says sales fell 12.5 per cent nationally on a month-over-month basis, which follows a record March.
BMO senior economist Robert Kavcic says it’s important to keep things in perspective considering sales were 45 per cent above the 10-year average. With that said, he says a number of factors could be slowing momentum.
“Mortgage pre-approvals at record-low rates running their course (5-year fixed rates have backed up about 30 bps from their lows); the Bank of Canada's more hawkish tilt tweaked the conversation on interest rates ever so slightly (and that is a very powerful mechanism); there might finally be some light at the end of the pandemic tunnel even though cases were still high in April; stay-at-home orders may have played a role as well; and we might finally be seeing some buyer fatigue," said Kavcic.
The number of newly listed properties fell by 5.4 per cent, but are still elevated relative to the 10-year average. Still, it hasn’t been enough to keep up with slightly slowing but still strong demand.
Prices, as measured by the MLS Home Price Index (HPI), rose 2.4 per cent month-over-month and are up 23.1 per cent year-over-year.
Ontario continues to lead the way with year-over-year price gains of around 20-50 per cent, depending on the region. B.C., Quebec, and New Brunswick are up around 10-30 per cent. The Prairie provinces, Newfoundland and Labrador are up around 5-15 per cent.
“This market is still extremely strong across geography and segment, even if we've likely seen peak momentum. It's still a long way back from the moon,” said Kavcic.
Detached housing markets remain strong, but condos continue to play catch up. Prices are up 8.5 per cent year-over-year in April, for the biggest gain since mid-2018.
A housing slowdown
"While housing markets across Canada remain very active, there is growing evidence that some of the extreme imbalances of the last year are beginning to unwind, which is what everyone wants to see happen," stated Cliff Stevenson, Chair of CREA.
"That said, the slowdown in sales activity between March and April was at a time that COVID cases, including very concerning variants, hit their highest levels ever and many jurisdictions enacted fresh lockdowns, making it harder to get a clear read on the underlying levels of demand and supply.
Stevenson says 2021 could be another year that the typically busy spring market gets pushed into the summer.
Ratehub CEO James Laird says March was probably the high water mark, based on the transactions data.
"The higher stress test, which is likely to be implemented June 1st, will put downward pressure on the real estate market in the second half of 2021," said Laird.
Jessy Bains is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jessysbains.