Home sales up in March as buyers re-enter market with low supply

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Millicent Wong
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financial post

  1. property

A 1.4% surge marks the first consecutive monthly gains in more than a year

Released April 14, 2023 • Last updated 3 hours ago • 3 minutes read

Houses sell faster when supply is low. Houses sell faster when supply is low. Photo by Ashley Fraser/Postmedia

According to a report from the Canadian Real Estate Association, national home sales continued to rise in March while markets tightened significantly as postponed buyers returned.

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The 1.4 percent increase in sales recorded by Multiple Listing Service (MLS) systems marked the first consecutive monthly gains in more than a year, CREA said. Gains over the past two months show that the property market slowdown may be reversing.

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The association, which represents more than 100,000 real estate agents, updated its forecasts for the resale housing market for 2023 and 2024 on April 14 after posting modest monthly gains in February and March.

“While the spring market is heating up and it looks like some buyers are emerging from the sidelines, it’s important to remember that the intense market conditions of the last few years haven’t gone anywhere, they’ve just been on pause,” CREA- Chair Jill Oudil said in a press release.

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She said homes are also selling faster as buyers re-enter a housing market with historically low supply. The latest figures show a 5.8 percent monthly decline in new home listings in March.

“New supply is currently at a 20-year low,” CREA said, noting that the monthly decline in March was led by a majority of the census’ major metropolitan areas.

The intense market conditions of recent years have not gone away, they have just paused

Jill Oudil, Chair, CREA

The association said the actual or non-seasonally adjusted number of transactions in March fell 34.4 percent from the historically strong March 2022.

It said sales in March 2023 were similar to 2018 and 2019 and also the smallest year-on-year decline since last September.

“The spring 2023 housing market is picking up steam after a tough 2022, and green shoots continued to pile up in March,” said Shaun Cathcart, CREA’s senior economist.

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Supply remains a problem even though sales are trending higher, the Bank of Canada benchmark interest rate is on hold and the MLS home price index is stabilizing across the country, he said.

CREA also said the ratio of sales to new listings rose to 63.5 percent in March, the tightest market in a year. Registrations have dropped significantly and sales are picking up again.

The Aggregate Composite MLS Home Price Index also rose 0.2 percent month-on-month in March, the first, albeit small, increase since February 2022, according to CREA.

“Some buyers are expected to re-enter the housing market after waiting marginally for additional certainty about mortgage payments and property value — two important signals that could be here,” CREA said in a separate news release accompanying its updated guidance .

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Around 493,000 properties are expected to be resold through MLS systems in 2023, down 1.1 percent from 2022 and nearly flat from the previous national forecast.

“After almost a year without major declines, the downward adjustment in selling activity due to rising interest rates and high uncertainty appears to be in the rear-view mirror,” CREA said.

It also forecast that the national median home price will fall 4.8 percent annually to $670,389 in 2023, but that’s an increase of about $8,000 from its previous forecast.

Data from CREA is broadly consistent with similar reports on the Canadian housing market released earlier this week.

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  3. Royal LePage said demand for housing is once again outstripping supply as buyers return to power.

    Royal LePage raises house price forecast for 2023

A Royal LePage report on April 13 showed an earlier-than-expected pick-up in activity in Canada’s major housing markets, prompting the real estate company to raise its forecast for home price gains in 2023.

Royal LePage said demand is again outpacing supply as buyers return in force, particularly first-time home buyers, while housing supply conditions remain “extremely low”.

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