Between July and August, national home sales fell 4% as the market slowed: CREA

The Canadian housing market experienced a slowdown last month, with sales and prices dropping between July and August due to the Bank of Canada's latest interest rate hike. Seasonally adjusted sales totaled 38,345 in August, down 4.1% from July, while the actual number of sales was 40,257, up 5.3% from a year earlier. This softening could be a welcome sign for buyers who watched housing costs soar during the COVID-19 pandemic only to be handed a succession of interest rate hikes as prices began to fall.

The Bank of Canada dealt prospective buyers another blow in July, making August the first full month in the new interest rate environment. However, CREA chair Larry Cerqua saw some stability returning to the market, despite sales being pulled lower in August by declines in Greater Vancouver and the Fraser Valley, Montreal, Ottawa, Hamilton and Burlington, Ontario, as well as London and St. Thomas, Ontario.

The listing flow is much stronger than seen earlier in the year and is now even tracking in line with pre-COVID norms. The seasonally adjusted average price of a home in August fell 2.3% from July to $674,184, while the actual price was up 2.1% from a year earlier to $650,140.

Regional differences are also re-emerging, with price growth remaining solid in Quebec and the East Coast, followed by British Columbia and the Prairies. Cooper sees the Bank of Canada backing off on rate hikes and supply gradually returning, helping housing activity pick up in the coming months.