In a positive turn of events, the Canadian housing market has witnessed an increase in the number of homes sold compared to the previous year. This rise of 1.4 percent signifies a significant step forward in the market's recovery, which had been struggling to reach the 10-year monthly moving average since experiencing a sharp price drop at the end of last year's spring season. While this growth in volume is encouraging, it's important to note that the situation regarding prices might be different.
One of the factors contributing to the growth in home sales is the substantial increase in new listings, which rose by 6.8 percent compared to the previous month. This surge in supply indicates that homeowners are capitalizing on the robust spring market and the consistent price growth observed in the housing market since January 2023. As a result, the number of homes sold has risen by 5.1 percent since April 2023. However, it's worth mentioning that there is a relatively balanced supply heading into the summer market, with 3.1 months of inventory available. This suggests that the usual seasonal reduction in demand during the summer months could potentially cool the market in the coming months.
Although the volume of home sales is showing signs of recovery, the situation regarding prices is still challenging. The MLS Home Price Index, a measure of housing prices, is still down by 8.6 percent since May of the previous year. However, there has been a slight improvement as it increased by 2.1 percent compared to the previous month. Looking at the average price perspective, the majority of markets are still experiencing a decline since the same time last year. Despite this, the national average has seen a rise of approximately 3.0 percent, with British Columbia, Alberta, and Nova Scotia posting positive annual gains.
Moving forward, there are lingering uncertainties about whether the Canadian real estate market can maintain its current strength until the end of 2023. The impact of summer seasonality, combined with potential headwinds from the recession, remains a question mark for the market's sustainability. Continued monitoring of market trends and factors such as supply, demand, and economic conditions will provide a clearer understanding of the market's trajectory in the months to come.
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